ERISA appeals involving disability benefits are, with limited exception, supposed to be decided within forty-five (45) days.  29 C.F.R. § 2560.503-1(i)(3)(i).  Additionally, however, the regulations allow for an extension of up to forty-five (45) additional days when “special circumstances” exist.  29 C.F.R. § 2560.503-1(i)(1)(i).  Over the years extension-taking has become routine, with insurers and plan administrators not infrequently paying no more than lip service to the requirements set forth in the regulations.  A pair of recent decisions out of the Southern District of New York may serve to remedy that.

In the first, Salisbury v. Prudential Ins. Co. of Am., 238 F. Supp. 3d 444 (S.D.N.Y. 2017), the disability insurer (Prudential) was flagged for taking an extension without stating “special circumstances.”  The sole rationale for the extension, that additional time was needed so that the information in the file could be reviewed, was deemed entirely unexceptional.  As a remedy for what transpired, the court deprived Prudential of the benefit of deferential (or “arbitrary and capricious”) review — a rather consequential sanction.

In the second, McFarlane v. First Unum Life Ins. Co., 274 F. Supp. 3d 150 (S.D.N.Y. 2017), the claimant filed suit while her ERISA appeal was still pending.  In response to the disability insurer’s motion to dismiss for failure to exhaust administrative remedies, the claimant argued that the disability insurer’s extension notice was defective because it did not set forth the date by which the insurer expected to render a decision (a requirement under the regulations).  The court agreed, holding that while the notice provided a “rough timetable” of what was expected to come, that was plainly insufficient under the regulations.  See 29 C.F.R. 2560.503-1(i)(1)(i).

Salisbury v. Prudential Ins. Co. of Am., 238 F. Supp. 3d 444 (S.D.N.Y. 2017)

McFarlane v. First Unum Life Ins. Co., 274 F. Supp. 3d 150 (S.D.N.Y. 2017)