What is the “Deemed Exhausted” Rule?

What is the “Deemed Exhausted” Rule?

The U.S. Department of Labor (DOL) recently modified some of the rules that govern long-term disability claims. One of the updated procedures establishes the “deemed exhausted” rule. This rule states that if the plan administrator for your long-term disability insurance policy is not following proper procedures in processing your claim for benefits, you may be able to proceed directly to litigation in federal court as opposed to being required to first undergo the administrative appeals process.

Normally, you are required to “exhaust” your administrative remedies before you can file a lawsuit to challenge your insurance company’s denial of long-term disability benefits. If your insurance company denies your claim for benefits, you typically must appeal the denial directly to the insurance company before you can go to court to appeal. In some cases, you must go through two levels of administrative appeals with your insurance company before you can go to court. Although it may seem useless to appeal the denial of your claim to the same plan administrator that denied your claim in the first place, you still are required to go through this often time-consuming, stressful, and ultimately futile process.

Under the new DOL regulation, however, you can bypass the administrative appeals process when the claims administrator is not following the claim procedures for processing your claim and any subsequent appeals. Plan administrators must follow specific timeframes during this process. If they fail to do so, however, then you may have the right to go ahead and file a suit to challenge the denial of your claim in federal court. In this case, the plan administrator’s failure to follow the DOL rules and procedures constitutes a constructive exhaustion of your remedies that permits you to move forward with your appeal in court.

When you apply for long-term disability benefits, you need to be aware of your rights and responsibilities under your long-term disability plan. At Bonnici Law Group, we offer you client-centered representation at all stages of the long-term disability benefit claims process. When you need the kind of help that only an experienced long-term disability benefits attorney can offer you, contact Bonnici Law Group at 619-259-5199 or help@bonnicilawgroup.com.

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