45 days means 45 days: Man suing for long-term disability benefits under ERISA can proceed
"By the 46th day after his appeal, Hartford had not determined McQuillin’s benefits nor extended its review time."
A three-judge panel of the U.S. Court of Appeals for the Second Circuit on Tuesday found that a man seeking long-term disability benefits under the Employee Retirement Income Security Act can proceed with his suit 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 appellate ruling reverses 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, did not exhaust his administrative remedies.
The panel of Circuit Judges José Cabranes, Guido Calabresi and John Walker Jr. found that claimants must exhaust their plans’ internal 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 labor regulations. They described the relevant regulations as “fully consistent” in their “text, structure, history, and purpose.”
“A ‘benefit determination on review’ must finally decide the claimant’s benefits within 45 days, assuming the absence of special circumstances that require an extension,” Walker wrote for the panel. “By the 46th day after his appeal, Hartford had not determined McQuillin’s benefits nor extended its review time. So, McQuillin was deemed to have exhausted his plan remedies and could bring suit in federal court.”
The panel found that a valid “benefit determination on review” must determine whether the claimant is entitled to benefits, rejecting Hartford’s argument that non-final decisions constitute benefit determinations.
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 ACLI supporting Hartford.
The labor department’s brief, signed by Senior Trial Attorney Marcia Bove of the department solicitor’s Plan Benefits Security Division, held that the district court’s interpretation could lead to an outcome “thwarting ERISA’s purpose” of providing access to the federal courts.
“Enforcement of the 45-day time limit imposed by the regulation for review of disability claim denials is critical to protecting claimants who need the replacement income that disability benefits provide,” Bove wrote. “The district court’s interpretation of the regulation, if upheld, risks nullifying those requirements.”
The American Council of Life Insurers was represented by attorneys with Ogletree, Deakins, Nash, Smoak & Stewart, who argued in their brief that Hartford’s process was consistent with ERISA.
Claim administrators should be able to “render complete and accurate claim decisions based on a full evidentiary record,” they argued.
“Claim administrators have no desire or incentive to drag out the disability claim process which is already complex and time consuming nor have Plaintiff or the Department proffered any support for such an outcome,” they wrote.