The Employee Retirement Income Security Act of 1974 (ERISA) provides standards for private employer-provided group insurance plans, including disability, life, accidental death and dismemberment, pension and health insurance plans. One of ERISA’s critical protections is its provision of a federal cause of action for participants and beneficiaries to recover benefits due under a plan.

Understanding ERISA Claims and Insurer Obligations

ERISA imposes fiduciary duties on plan administrators and insurers – they are required to act in the best interests of plan participants. This includes:

• Providing complete and accurate information: Insurers must ensure that plan participants receive necessary documentation, such as Summary Plan Descriptions (SPDs) and explanations of benefits.
• Processing claims promptly and fairly: Insurers must adhere to established timelines for processing claims and appeals, providing clear and detailed reasons for any denials.
• Upholding fiduciary duties: Insurers must act with the utmost care, skill, prudence, and diligence when managing plan assets and handling claims.

Unfortunately, insurers often mishandle ERISA claims, which can cause financial hardship because of a claim denial or by an undue delay of benefits. Insurers can mishandle claims in many ways:

• Disability insurers cherry-picking claimants’ medical records and intentionally interpreting them in a way that is unfavorable to their claims.
• Insurers giving more credence to medical reviewers than to the claimants’ own treating doctors. Insurers will pay “independent” peer review specialists, or “paper review” doctors and nurses who never interact directly with the claimants or their treating physicians and provide opinions based on nothing more than reviewing the medical records available to them.
• Insurers sometimes mailing time-sensitive notices to the wrong address or not mail notices at all, then lapsing a life insurance policy based on failure to pay a premium or provide information within a certain time.
• Insurers improperly relying on exclusions or other policy provisions in a manner not tenable under existing law or not consistent with the applicable facts.

When insurers fail to meet these obligations, plan participants can seek recourse through the process set forth by ERISA:

Administrative Appeals

Step 1: Review the Denial Letter

When an ERISA claim is denied, the insurer must provide a written denial letter detailing the specific reasons for the denial, referencing the plan provisions on which the denial is based, explaining the procedure for appealing the decision and giving a date by which the appeal must be filed. This letter is crucial as it outlines the grounds for the denial and the steps the participant must take to challenge it. To submit an effective appeal, you must first know what issues or items the appeal should address.

Step 2: File an Appeal

ERISA mandates that plans establish a fair and reasonable process for participants to appeal denied claims. You typically have 180 days from the date of receipt of the denial letter to file an appeal. The appeal must be thorough and include:

• A detailed explanation of why the denial is incorrect: This should address the reasons provided in the denial letter and cite relevant plan provisions and medical evidence.
• Supporting documentation: Include all relevant medical records, expert opinions, personal statements and any additional evidence that supports the claim.

Step 3: Await the Decision

The insurer is required to review the appeal and issue a decision within a specified timeframe. For a disability claim, for example, the decision must be issued within 45 days, unless the insurer has a legitimate need for more time, in which case it can take up to 45 more days as long as it provides written notice of its need for more time (“special circumstances”) before the first 45-day deadline. If the appeal is denied, the insurer must provide a detailed explanation of the reasons for the denial and notify the participant of their right to file a lawsuit in federal court under ERISA.

Filing a Lawsuit in Federal Court

Once your appeal is denied, you have exhausted your administrative remedies and can file a lawsuit in federal court. ERISA grants federal courts jurisdiction over these claims, though some plans allow claimants the option of filing suit in state court.

Damages Available Under ERISA

ERISA provides for only specific, limited damages:

• Recovery of benefits: You can seek payment of the benefits due under the plan.
• Statutory penalties: For particular violations, such as failure to provide requested plan documents, you can seek statutory penalties.
• Attorney’s fees and costs: ERISA allows you to recover attorney’s fees and costs by making a motion for the court to order the insurer to pay your fees and costs. The court does not automatically award fees and costs – it requires a demonstration of some success on the merits of the case, and the court has broad discretion in whether to award fees and costs and if so, how much to award.

Evidence and Administrative Record

ERISA cases are often decided de novo, meaning that the court essentially steps into the insurer’s role of reviewing the information included in your initial claim, the insurer’s claim file, and your appeal and decides whether a claim denial was appropriate without any deference to the claim administrator’s decision. The administrative record is complete when the insurer issues its final determination on your appeal, and you will only be able to admit additional evidence that goes outside the administrative record in limited circumstances. For example, if you had a claim for Social Security Disability Income benefits pending at the time the insurer denied your appeal, then the Social Security Administration later issues a decision on your SSDI claim, the court may use discretion to admit the SSA decision into evidence.

In cases that are not decided de novo, the court determines whether the insurer’s decision was an abuse of discretion. This standard of review is highly deferential to the insurer, meaning the court will find in the insurer’s favor as long as it determines that the insurer had at least some reasonable basis for denying your claim. For example, it is an abuse of discretion for an insurer to purposely exclude important evidence, like MRI or x-ray imaging when providing records to an independent review specialist. However, this standard of review is more difficult for ERISA plan participants and their beneficiaries as insurers or employers have broad discretion in deciding claims.

Additional Remedies and Considerations

• Extra-Judicial Complaints: You can file a complaint with certain administrative agencies. For example, you can submit a complaint to the Department of Labor’s Employee Benefits Security Administration (EBSA), which oversees ERISA compliance. While the EBSA does not represent individual participants, it can investigate potential violations and take enforcement action against insurers. Additionally, you may submit a complaint to the appropriate state agency that oversees insurance matters, for example, the California Department of Insurance.
• State Law Claims: ERISA generally preempts state law claims related to employee benefit plans. However, you may still be able to pursue state law claims in certain limited situations. You can also pursue recourse in state court if your policy is exempt from ERISA. For example, group insurance plans provided by religious and government organizations and self-funded policies are typically not governed by ERISA.

Conclusion

When your insurer or employer mishandles your ERISA claim, you are not without recourse. By understanding the steps involved in filing administrative appeals, pursuing litigation in federal court, and exploring additional remedies, you can protect your rights and secure the benefits you are entitled to. Given the complexities of ERISA, seeking legal counsel experienced in ERISA litigation can significantly enhance the likelihood of a successful outcome. If your ERISA claim has been denied or you are considering submitting a claim, reach out to the experienced ERISA attorneys at the McKennon Law Group PC for a free consultation.

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.

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.