Jan 282014

As most ERISA claimants know (or will shortly into their lawsuit find out), a District Court’s review of an adverse benefit determination is normally limited to the materials in the administrative record, that is, the materials that were presented to and/or considered by the insurance company while the claim was still under consideration. Indeed, that facet of ERISA litigation is the main reason why ERISA appeals need to be handled with extreme care, for an appeal often serves as a claimant’s final opportunity to present evidence helpful to the cause.

There is precedent for a District Court to consider evidence that is dehors (or outside) the administrative record where “good cause” to do so is shown, but a recent decision from the Eleventh Circuit takes it a step further. In the case, the disability insurer, Life Insurance Company of North America (“LINA”), had required Diane Melech (the claimant) to pursue a Social Security Disability Income (“SSDI”) claim — a practice universally pursued by disability insurers, because when a claimant succeeds with an SSDI claim, the insurer gets to offset the amount received. But before the SSDI claim was decided, LINA denied Ms. Melech’s disability claim, and while she was in the process of appealing LINA’s denial, the Social Security Administration (“SSA”) had her submit to two (2) medical examinations (which, in turn, generated two (2) reports). Although Ms. Melech’s SSDI claim was thereafter approved, and LINA was apprised of that fact, the reports were never presented to LINA, and LINA never sought to obtain them. Instead, LINA denied Ms. Melech’s appeals, after which she brought suit.

The District Court found in LINA’s favor, deciding that the decision to deny benefits was correct based on the record before it — a record that did not include the reports generated by the two (2) SSA physicians. The Eleventh Circuit, by 2-1 vote, viewed the matter differently, holding that once LINA took the self-serving step of requiring Ms. Melech to pursue an SSDI claim, it became obligated to consider the evidence presented to the SSA in conjunction therewith (regardless of whether or not that evidence had found its way into the administrative record). In other words, having sent Ms. Melech to the SSA in pursuit of SSDI benefits, LINA had an affirmative obligation to seek out and obtain the evidence presented to the SSA.

Melech v. Life Ins. Co. of N. Am., 739 F.3d 663 (11th Cir. 2014)

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