A three-judge panel of the United States Court of Appeals for the Second Circuit ruled on Tuesday that a man seeking long-term disability benefits under the Employee Retirement Income Security Act can pursue his lawsuit because the Hartford Life and Accident Insurance Company failed to provide a final decision on his benefits within 45 days of his administrative appeal, in violation of ERISA regulations.
The appeal ruling overturns the decision of U.S. District Judge Joanna Seybert of the Eastern District of New York, who granted The Hartford’s motion to dismiss on the grounds that the plaintiff, John McQuillin, has not exhausted his administrative remedies .
The panel of Circuit Judges José Cabranes, Guido Calabresi, and John Walker Jr. concluded that plaintiffs must exhaust their plans’ home remedies before filing federal lawsuits, and a plan’s remedies are “deemed exhausted if the plan administrator does not “strictly” adhere to the requirements of the relevant section of the labor regulations. They described the relevant regulations as “completely consistent” in their “text, structure, history and purpose”.
“A ‘post-review benefit determination’ must ultimately decide the claimant’s benefits within 45 days, assuming there are no special circumstances requiring an extension,” Walker wrote for the panel. “As of the 46th day after his appeal, Hartford had not determined McQuillin’s benefits or extended his review time. Thus, McQuillin was deemed to have exhausted his plan’s remedies and could sue in federal court.
The panel concluded that a valid “determination of benefits after examination” must determine whether the plaintiff is entitled to the benefits, rejecting Hartford’s argument that non-final decisions constitute determinations of benefits.
The U.S. Secretary of Labor and the American Council of Life Insurers each filed amicus briefs in the case, with the DOL supporting McQuillan and the ACLI supporting Hartford.
The Labor Department’s brief, signed by Senior Prosecutor Marcia Bove of the Department’s Counsel Plan Benefits Security Division, said the district court’s interpretation could lead to an outcome “thwarting the ‘ERISA’s goal’ to provide access to federal courts.
“Enforcing the 45-day time limit imposed by the regulations for reviewing disability claim denials is essential to protect claimants who need the replacement income provided by disability benefits,” Bove wrote. “The district court’s interpretation of the settlement, if upheld, risks nullifying these requirements.”
The American Council of Life Insurers was represented by attorneys from Ogletree, Deakins, Nash, Smoak & Stewart, who argued in their brief that Hartford’s process complied with ERISA.
Claims administrators should be able to “make complete and accurate claims decisions based on a complete evidentiary record,” they argued.
“Claims Administrators have no inclination or incentive to drag out the already complex and time-consuming disability claims process, and neither Claimant nor the Department has offered any support for such an outcome,” they wrote. they wrote.