ERISA Time deadlines and Standard of Review

Under the ERISA regulations, a plan must issue a benefits determination no later than 45 days after receiving a claim.  The regulations provide for an extension of that deadline, but what happens if the plan doesn’t comply with the 45 day deadline?  It appears the answer depends upon the jurisdiction.

One consequence of the failure to comply with the 45 day deadline is “exhaustion.”  In other words, a claimant is not permitted to file suit in federal court until such time as administrative remedies have been exhausted.  Thus, if a decision is not made by the plan within 45 days, there is authority for the proposition that such a situation constitutes a constructive denial of the claim.  As a result, the plaintiff can bring a lawsuit in federal court. See 29 CFR 2560.503-1.

Once the Plaintiff brings the claim in federal court, what happens?  Normally, disability determinations under ERISA are reviewed by the court under the arbitrary and capricious standard of review.  Interestingly, there is some authority for the proposition that a plan’s failure to comply with the 45 day benefit determination deadline results in de novo review instead of the deferential arbitrary and capricious standard.   Stefansson v. The Equitable Life Assurance Society of the United States, 2005 U.S.Dist. Lexis 21723 (M.D. Ga. 2005) (“because DMS failed to render a benefits determination in accordance with the regulatory requirements, application of the de novo standard of review is appropriate”).  See also: Gilbertson v. Allied Signal, Inc., 328 F.3d 625 (10th Cir. 2003); Jebian v. Hewlett Packard Co., 349 F.3d 1098 (9th Cir. 2003); Kinstler v. First Reliance Standard Ins. Co., 181 F.3d 243 (2nd Cir. 1999); Buck v. Kraft Food Global, Inc., (M.D.Tenn. 2007); Kosiba, 384 F.3d 58 (3rd Cir. 2004). But see: Southern Farm Bureau Life Ins. Co. v. Moore, 933 F.2d 98 (5th Cir. 1993); Hackney v. The Lincoln National Life Ins. Co., 2012 U.S.Dist. Lexis 694 (W.D.Ky. 2012) (de novo determination appropriate in some situations, but Court remanded to insurer for benefit determination).

If you have a long term disability claim governed by ERISA, and the insurer has not rendered a timely decision, it is important that you contact an attorney to discuss your rights.

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About tngadisabilitylawyer
Disability Lawyer in Tennessee and Georgia.

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