If you have insurance coverage through an employer-sponsored benefit plan that is governed by the Employee Retirement Income Security Act of 1974 (ERISA), it can be vital for you to understand the timing and deadlines related to the claims process. ERISA sets forth specific guidelines that insurers and administrators must adhere to when processing claims and appeals. One critical aspect of these guidelines is the timeframe within which the insurer or administrator must provide a decision on appeal. Failure to adhere to these deadlines can have significant implications for both the insurer and the claimant.

The ERISA Appeals Process

Pursuant to the ERISA regulations, you have the right to appeal the denial of your claim for benefits, and in fact ERISA requires that you go through the appeals process and exhaust your administrative remedies prior to suing the insurer or administrator. This appeals process is typically the first step in seeking review of an adverse benefit determination, such as a denial of coverage for medical treatment or disability benefits.

When you submit an appeal, the insurer or plan administrator must review the appeal and issue a decision within a specified time. For non-urgent health insurance claims, ERISA regulations generally require the administrator to make a decision within 30 days after receiving the claim. However, this period can be extended by an additional 15 days if the administrator notifies the claimant in writing, explaining the need for the extension before the initial 30-day period ends. For life insurance and accidental death and dismemberment claims (“AD&D”), the claims administrator must make an initial decision on a life or AD&D insurance claim within 90 days after receiving the claim. This period can be extended by an additional 90 days if the administrator notifies the claimant in writing before the initial 90-day period expires, explaining the need for the extension and providing the date by which a decision is expected.

For disability claims, the appeal decision deadline is 45 days from the date the appeal is received, but the insurer or administrator can take up to an additional 45 days if they demonstrate that failing to meet the first 45-day deadline is warranted due to “special circumstances.” For example, the insurer or plan administrator will review your medical records in deciding your claim, and these reviews typically consist of having the records reviewed by third parties who provide reports, providing you an opportunity to respond to any inquiries made by these reviewers and their reports, and obtaining recent or ongoing medical records. Courts have held that because such events are typical in disability claim reviews, failing to meet an appeal decision deadline due to waiting for updated medical records, or for you to respond to a third-party report, for example, do not constitute special circumstances that justify missing the deadline.

Consequences of Missing the Deadline

A vital regulation of ERISA is that if an insurer fails to render a decision on your appeal within the appropriate period (or any extended period that may apply), you may consider your appeal denied and therefore, your administrative remedies exhausted. The significance of this rule is two-fold: First, it allows you to continue moving toward an ultimate conclusion, barring the insurer from indefinitely delaying its decision and holding you in limbo. Second, it can impact the evidence that will come into play when you sue the insurer and/or administrator. If the insurer or administrator misses the 45-day deadline for an appeal decision for disability claims without notifying you before the deadline of special circumstances justifying a delay, the claim will be deemed denied and you may consider your administrative remedies exhausted as of the 45-day deadline date. This allows you to properly file suit in federal court any time after that date, meaning that your claim is no longer on the insurer or administrator’s schedule, but on the court’s schedule. Additionally, the court’s review is limited to the administrative record at the time of its final decision, so the insurer or administrator may be unable to develop additional evidence to support its denial of your claim. In addition, the de novo standard of review would apply even if the abuse of discretion standard would have otherwise applied.

For example, the insurer may contract with an independent medical expert to provide a report based on your medical records. If the insurer misses the deadline for your appeal decision and you sue to recover your benefits, the administrative record in court will consist of the evidence available to the insurer at the time of the deadline. Thus, if the insurer had not yet provided you with that independent expert’s report, that report will not become part of the administrative record without permission from the court. The result could be that the insurer’s primary piece of evidence to support its denial of your claim is not considered by the court, thereby increasing your chances of a successful outcome.

How to Address a Missed Deadline

If your insurer or plan administrator misses the deadline to provide you with a decision on your appeal, you should take proactive steps to protect your rights:

1. Documentation: Keep detailed records of all communications with the insurer or administrator regarding the appeal. This includes the date the appeal was submitted, any acknowledgments received, and subsequent follow-ups.
2. Communication with the plan administrator: write a letter to the plan administrator and to the claim administrator confirming that it is your position that appeal deadline has passed without an appropriate decision and detail the consequences of their failure to comply with the ERISA deadlines.
3. Consultation with Legal Counsel: Consider consulting with an attorney who specializes in ERISA claims. Legal professionals can provide guidance on navigating the appeals process and ensuring compliance with all procedural requirements.
4. Timely Action: If the deadline passes without a decision, promptly notify the insurer or administrator in writing that you consider your administrative remedies exhausted. This notification should be clear and concise, documenting the failure to decide within the required timeframe.

Once your administrative remedies are considered exhausted due to the insurer’s or administrator’s failure to decide within the ERISA deadline, you may file a lawsuit to have a federal court review the administrative record and provide a decision on your claim.

Conclusion

Timely resolution of appeals under ERISA is crucial for both insurers and claimants. Insurers and administrators must adhere to strict deadlines when reviewing appeals to avoid the claimant considering their administrative remedies exhausted. For claimants, understanding these deadlines and knowing their rights under ERISA is essential for navigating the appeals process effectively. By being aware of these regulations and taking proactive steps when necessary, you can protect your rights to challenge benefit denials obtain the benefits to which you are entitled under your policy.

If your ERISA claim has been denied or you have not received a timely decision, reach out to the experienced ERISA attorneys at McKennon Law Group PC at 949-504-5381 for a consultation at no charge.

On May 9, 2024, in the matter of Jason Kim v. The Guardian Life Insurance Company of America, 8:23-cv-01579, 2024 WL 2106240 (C.D. Cal. May 9, 2024), the Honorable David O. Carter of the Central District of California ruled in favor of McKennon Law Group PC’s client, Jason Kim, ruling that our client was entitled to long-term disability (“LTD”) benefits under a group disability policy (the “Policy”) governed by ERISA. The insurer, Guardian Life Insurance Company of America (“Guardian”), had denied the claim based on a pre-existing condition exclusionary clause. Judge Carter ruled that Guardian had erred in denying the claim.

For greater context, pre-existing condition exclusions are portions of disability insurance policies that preclude coverage if the insured had the disabling condition, or a condition related thereto, before coverage under the policy began. These clauses are aggressively used by insurers to protect their profit margins. Of note, whereas an insured usually carries the burden of establishing entitlement to coverage under an insurance policy, if an insurer invokes a pre-existing condition exclusion, then the insurer has the burden of establishing that the exclusion applies.

Here, the insurer invoked the clause when it simply did not apply. Before obtaining coverage under the Policy, our client suffered from mild depression, anxiety, and attention deficit hyperactivity disorder (“ADHD”). Of note, these conditions were sufficiently mild that they were borderline subclinical. In January 2021, however, everything changed. Our client developed COVID-19. Shortly thereafter, he developed a wide array of serious symptoms. These included brain fog, cognitive impairments, extreme pacing (our client wore out a pair of shoes in a couple of days), fever, chills, insomnia, panic attacks, restlessness, agitation, “pressure in the head,” loss of the ability to communicate, short-term memory damage, psychosis, and damage to the ability to process information. He was prescribed the medication Zyprexa. Unfortunately, he had a severe reaction to the medication. He developed tardive dyskinesia (“TD”) and tardive akathisia (“TA”). These are severe and disabling neurological/movement disorders.

Our client submitted a claim for LTD benefits under the Policy. Guardian denied the claim. It insisted that our client’s anxiety, depression, and ADHD were pre-existing conditions for the myriad of symptoms he developed in January 2021. Of note, virtually everyone who had knowledge of the claim insisted that the pre-existing condition exclusion did not apply. Even the insurance broker who sold the Policy insisted that the clause did not apply. Guardian, however, refused to listen. It denied the claim.

We sued Guardian for the outstanding benefits under the Policy. The case ultimately went to trial. The parties submitted extensive briefing and the 6,000-page administrative record to the Court. The Court heard over two days’ worth of oral argument and then requested a second round of briefing. Ultimately, on May 9, 2024, the Court ruled in our client’s favor.

Guardian’s case relied almost entirely on a few medical records related Mr. Kim’s prescription of Zyprexa. In particular, the medical records stated that Mr. Kim was prescribed the medication for anxiety and depression. Guardian reasoned that, therefore, ALL of Mr. Kim’s symptoms were related to anxiety and depression, the pre-existing conditions. We, in turn, explained that, per the medical records, his then-treating physician had only spoken to Mr. Kim for five minutes over the phone before prescribing the medication. He had not physically examined Mr. Kim or administered any tests. We also explained to the Court that all of Mr. Kim’s subsequent treating physicians agreed that he was not suffering from common anxiety and depression in January 2021. They attributed his symptoms to COVID-19 or psychosis. The Court concluded that a five-minute phone call was insufficient evidence to rely on. It stated:

Guardian focuses on the fact that the records from Dr. Moldawsky reference pre-existing anxiety and depression. However, medical diagnoses often change over time as symptoms develop and emerge. That Dr. Moldawsky believed at the onset of Plaintiff’s severe symptoms that pre-existing anxiety and depression may have been reasonable at the time, even though it later became clear that Plaintiff’s condition was substantially different. Guardian’s insistence that Plaintiff’s psychosis was simply a more severe form of his prior anxiety and depression is not consistent with the facts or evidence. (Id. at *8)

Other evidence revealed how unreasonable Guardian’s position was. Not only did the agent who sold the Policy argue against the exclusion’s applicability, but even one of Guardian’s own peer review doctors specifically explained that there was no connection between Mr. Kim’s disability and his pre-existing conditions. See id. at *6.

We argued that COVID-19 caused Mr. Kim’s symptoms. Multiple treating physicians had reached that conclusion. However, although Guardian and its physician rejected this conclusion, as the Court explained:

Plaintiff’s medical records demonstrate that COVID-19 has been shown to cause psychosis and could potentially have caused psychosis here. Guardian’s own employee acknowledged this. It is not necessary for Plaintiff’s claim, however, to demonstrate that COVID-19 triggered his health problems in early 2021. Plaintiff must demonstrate that what rendered Plaintiff disabled was not caused or substantially contributed to by a pre-existing condition or its treatment. The prior identified mental health conditions/treatments did not “cause or substantially contribute to” the disability during the lookback period. (Id. at *6)

Having concluded that the pre-existing condition exclusion did not apply, the Court then proceeded to analyze whether Mr. Kim was disabled under the Policy. See id. at *7. The Court explained that Guardian had failed to argue before the Court that Mr. Kim was not disabled. See id. at *7. It further noted that there was significant medical evidence documenting Mr. Kim’s disability. See id. It determined that, in fact, he had been disabled during the time period in question.

Our client has sufficiently recovered that he has returned to work. As such, the Court awarded our client his benefits for a closed-end period.

Insurers tend to be overly aggressive when invoking pre-existing condition exclusions. However, it is the insurer’s burden to establish that the exclusion applies. This case served as yet another example, and warning, to insurers. They cannot carelessly invoke exclusions like the one involved here.