September 9, 2009
Get the Administrative Appeal Right
You have been denied long term disability benefits by your employer-provided disability plan. The denial letter says you have 180 days to send an appeal of the denial to the insurer. Should you do it? Is it important? Do you need a lawyer to handle the appeal? Can I sue in court without appealing the denial? Why should file an appeal with the same people who just denied me my benefits? Why would they change their mind?
The denial letter will give you some information about the denial, but it won't tell you why the administrative appeal process is important. Even if you are sure the insurer won't change its mind, you still should file the appeal. By law, you have to file the appeal of the denial of long-term disability benefits before you can sue the insurer in court.  Also, the court generally won't allow you to use any information in the lawsuit that was not submitted to the insurer in connection with the appeal.
For instance, let's say you believe your condition impairs your ability to think and reason (called "cognitive impairment"). One of the best ways to establish cognitive impairment is with a neuropsychological exam. Once the lawsuit is started, your lawyer may want to present the results of such an exam in the litigation. If you didn't have the test done and submit the results to the insurer during the appeal, however, you probably will not be able to use the results of the test in the lawsuit against the insurer. Or, you are claiming disability based on fibromyalgia, chronic fatigue syndrome or chronic back pain, and the insurer obtains a surveillance video that shows you going grocery shopping. You may want your physician to give a statement explaining why what is shown on the video is not inconsistent with your diagnosis or your restrictions and limitations. If you haven't submitted it during the appeal, you probably won't be able to submit it in any subsequent litigation.
A lawyer can assist in the administrative appeal by making sure that everything that would be necessary or useful during the litigation is submitted during the appeal. Even if you didn't use an attorney for the first level of the appeal, most insurers have a second optional or mandatory appeal where additional information can be submitted. Even if you have been denied twice, so long as not too much time has passed since the denial, we can often submit additional information during the appeal that we can then use in later litigation. Also, the same administrative exhaustion requirement applies to denials of employer-provided group medical and health insurance benefits, so you may want to use a lawyer in these cases as well.
Long-term disability benefits offered through your employer are governed by a federal law called the Employee Retirement and Income Security Act (commonly called "ERISA"). Courts have interpreted ERISA to require appeals to be filed with the insurer. . Long-term disability policies that you buy directly, and not through your employer, are not governed by ERISA, and are subject to state insurance laws. These generally do not require administrative exhaustion, but pursuing an appeal can result in the insurer changing its mind, so they are worthwhile to pursue even if they are not required.
ERISA benefit appeals and private disability insurance appeals can be complex, and actions you take during the appeal can affect your ability to recover in court later. Carefully consider whether a lawyer would be useful in navigating the process.
 There are some exceptions to this requirement to exhaust the plan's administrative remedies, but it is far better to file the appeal and not have to rely on these exceptions. If you haven't filed the appeal and want to know if you can still sue, give our firm a call and we can discuss it.