If the administrator denies an initial claim, what follows is an ERISA appeal process. The administrator’s notice of denial must provide information to assist the applicant in appealing the denial, including the reasons for its decision and the steps that can be taken to address these deficiencies. Denials must be appealed within 180 days. Appeals not filed in a timely manner are subject to being rejected, with the result that the applicant is forever barred from seeking a review of the denial in court. If that sounds rather harsh, it is: welcome to the world of ERISA disability insurance. Plan administrators must review timely appeals and notify a claimant of its benefit decision within 45 days, but can take an additional 30 days if necessary and for reasons beyond its control.
The 180-day appeal period is harsh in more ways than one. It is also the only time period during which the claimant may present documents and other information in support of a claim of disability. Once the appeal period ends and there are no more appeals available to the claimant, a claimant cannot add any additional documents or information to the claim file. If the claimant seeks a review of the denial in federal court, the judge will make a decision based on the claim file developed during the application and appeal periods, with very few exceptions.
There are no formal rules in place that allow claimants to gather documents and other information: There is no opportunity to take depositions, make specific document requests, submit interrogatories that must be answered, or take advantage of any of the other procedures and safeguards available in state or federal court for ensuring that both sides have all of the information they need, prepared in a manner that could ultimately be used at a trial if necessary.
Instead, the claimant may gather and submit additional medical records from more recent health care treatments, and/or submit any documents or information that may be helpful in winning the appeal. These submissions are not subject to the formal rules of evidence, and are only limited by the claimant’s creativity and resources. The administrator, for its part, often conducts internal reviews of the claim by having a staff doctor or nurse prepare a report. These staff reviewers often call the treating physicians as part of their investigation, and often follow up by sending “summaries” of the conversations that downplay evidence of disability or take other liberties in describing the disability and associated restrictions and limitations. The health care providers, for their part, must edit, ignore, or accept these summary letters, and often are acting without any understanding of the tendency of administrators to set claims up for denials.
Alternatively, an administrator may hire a medical professional to prepare an “Independent Medical Exam,” or IME. There are doctors who derive much, if not all, of their income from preparing such IMEs, often preparing them for only a handful of insurance companies whose business these doctors rely on to make a living. What is more, they often have limited knowledge of the illness or injury that is the subject of the claim, although they write reports that often become the basis for the denial of benefits. If it sounds like these medical exams are not very “independent,” you are starting to see the practices and pitfalls that await the unwary claimant.
Moreover, despite the fact that administrators are fiduciaries investigating claims on behalf of beneficiaries, it is often the case that these administrators fail to request records, fail to connect with treating physicians, fail to procure records from other agencies (like the Social Security Administration), and decide claims based on an incomplete record. It is ultimately the responsibility of the claimant to ensure that the administrator has everything necessary to make a decision, and it is simply a fact that it is in the interest of administrators to deny claims based on limited records rather than proactively seek all relevant and helpful records and information.