Your ERISA Watch – Premature Denial of Long-Term Disability Benefit Claim Mitigates Claimant’s Failure to Exhaust Administrative Remedies

This week’s notable decision is a Ninth Circuit decision in the matter of Cuaresma, Jr. v. Farmers Group Disability Income Plan, et al. , No. 16-16946, __F.App’x__, 2018 WL 2439529 (9th Cir. May 31, 2018). Although it is an unpublished decision, the fact pattern is a novel one and it presents a good roadmap for how an unwary claimant can get around the strictly applied exhaustion requirement.

In this case, Liberty Life denied Plaintiff’s claim for long-term disability (“LTD”) benefits prior to the expiration of his time to provide proof of claim and a date earlier than the date Liberty Life told him it would make a decision. Specifically, prior to the end of the policy’s elimination period (while he was receiving short-term disability benefits), Liberty Life wrote to Plaintiff on September 19, 2014 and advised him that it would begin reviewing his LTD benefit claim. Liberty Life gave Plaintiff until November 2, 2014 to return claim forms and submit medical records. However, Liberty Life denied his claim on October 30, 2014, a few days before its stated deadline. In addition, per the policy’s terms, Plaintiff had until at least mid-to-late November to complete claim forms (proof of claim had to be given to Liberty Life no later than 30 days after the end of the 26-week elimination period). 

Rather than appeal the claim denial to Liberty Life within the 180-day deadline, Plaintiff submitted a completed application nearly one year later. The district court granted Liberty’s motion for summary judgment on the defense that Plaintiff failed to exhaust his administrative remedies. 

The Ninth Circuit reversed the district court’s decision. It held that genuine issues of fact remain regarding whether Liberty properly handled and denied Plaintiff’s LTD claim before the full amount of time authorized under the Policy to submit materials had expired.  Even though Plaintiff did not complete his claim submission until nearly a year after the policy deadline, the court apparently found that of no moment. The court reversed and remanded with instructions to the district court to remand this case to Liberty Life to fully evaluate the merits of Plaintiff’s claim in compliance with the Policy.

This favorable outcome is a good example of how a procedural irregularity in the administration of a benefit claim can extend the strict deadlines that are all too often enforced against claimants. It remains important, however, for claimants to submit appeals of denied long-term disability claims by the 180-day appeal deadline. Most courts will enforce these deadlines against claimants even where there are procedural irregularities. But, for fellow plaintiffs’ attorneys, if a client walks through your door after missing the appeal deadline, you might not want to be too quick to turn that case away.

There were lots of other notable decisions this past week. Read them on our blog at https://www.lifeanddisabilitylaw.com/your-erisa-watch-premature-denial-of-long-term-disability-benefit-claim-mitigates-claimants-failure-to-exhaust-administrative-remedies/ .