ERISA’s rules for making claims for benefits and for appealing benefit denials can prejudice claimants. The rules are complicated, not obvious, and rarely fully disclosed. And if you don’t follow the rules, you can lose your right to file suit after a claim is denied.
To protect claimants’ rights during this process, the U.S. Department of Labor, the agency responsible for enforcing ERISA, has promulgated a regulation establishing minimum claims-handling standards requiring that persons claiming benefits under ERISA receive full and fair review of their claims. Among these rules is a requirement that ERISA plan administrators give claimants fair notice when their claims for benefits are denied. Denial notices must be given within 90 days of the claim and must contain enough information for the claimant to decipher what is needed to obtain benefits.
A recent decision by the Ninth Circuit Court of Appeals in Gordon v. MetLife confirms that ERISA plan administrators such as MetLife must follow the rules for giving claimants full and fair review. Gordon sued MetLife under ERISA after MetLife failed for years to decide his claim for Long-Term Disability benefits. After the fact, MetLife sought to justify its de facto denial of benefits by relying on language in the ERISA plan giving MetLife discretion to determine benefits.
The court ruled that MetLife’s failure to respond to Gordon’s claim until years after the fact violated the Department of Labor’s “full and fair review” regulation. Accordingly, the court determined MetLife could not rely on its discretionary authority to deny Gordon’s claim for Long-Term Disability benefits. Although the Gordon ruling is unpublished, meaning it is not binding precedent, the case is nevertheless an important reminder that ERISA plan administrators must follow the rules mandating full and fair review of benefit claims.
Seattle Insurance and ERISA Blog 