Most long-term disability plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) provide that claimants must exhaust their administrative remedies prior to filing a lawsuit in court challenging the denial of benefits. As a practical matter, for the purposes of most insurance plans, this means that you must complete any administrative appeals procedures for the denials of benefits as outlined in your insurance plan before you are eligible to file a lawsuit over the issue. The format of the administrative appeals with your insurance company must meet the timeline requirements established by ERISA. Failure to exhaust the procedural requirements of an administrative appeal may give the insurance company an affirmative defense against any lawsuit you may file.

Courts have uniformly upheld the requirement that a claimant exhaust all administrative remedies prior to filing suit on a denied claim for benefits, so long as the exhaustion requirement is specifically stated in the plan. See Spinedex Physical Therapy USA, Inc., v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1298 (9^th Cir. 2014). As a result, whether your plan has a single administrative appeal process or two tiers of review, you typically must comply with the appeals requirements in your plan before you are eligible to file a lawsuit regarding the denial of benefits. Otherwise, you risk the court dismissing your suit for a failure to exhaust administrative remedies as required by your plan.

For claims filed with long-term disability plans after January 1, 2018, however, the Department of Labor (DOL) has released new regulations that impact the traditional definition of “exhaustion of administrative remedies.” 29 C.F.R. § 2560.503-1 provides that individuals may proceed to file a lawsuit in federal court challenging the denial of long-term disability benefits when their claims are “deemed denied,” even if they have not yet exhausted their administrative remedies. More specifically, a claim for benefits is “deemed denied” when an insurance company fails to comply with claim procedure regulations, which gives individuals the right to proceed with a lawsuit. The only exception to this new regulation is if the violation is de-minimis or very minor, non-prejudicial, attributable to good cause or matters beyond the plan’s control, in the context of an ongoing good-faith exchange of information, and not reflective of a pattern or practice of non-compliance.

When you are disabled and unable to work, we know that every dollar can be crucial to the support of your household. Therefore, you need legal advice about building the most effective ERISA long-term disability claim possible. Bonnici Law Group provides skilled, aggressive legal representation on a regular basis for individuals who are seeking long-term disability benefits under insurance policies governed by ERISA. Our priority is to represent your interests and protect your rights to the benefits that you deserve. Call us at 858-261-5454 and schedule an appointment to meet with us about your case today.