By law, ERISA-controlled long-term disability plans must provide an internal appeal process, and the law is clear that claimants must tap into that process before they will be granted access to the courts.  Except in rare circumstances, a claimant who elects to go straight to court, bypassing an available internal appeal process, will quickly be shown the door. No doubt because internal appeals have been embossed with that critical “gatekeeper” function, Department of Labor regulations establish a deadline for insurance companies to decide internal appeals, i.e., 45 days with the possibility of a 45-day extension where “special circumstances” exist.  See 29 C.F.R. § 2560.503-1(i)(1)(i), (3)(i).  Absent a valid extension, once 45 days have elapsed without a decision (known under the regulations as a “benefit determination on review”), a claimant is at liberty to start suit.

So what happens when an insurance company issues a decision within 45 days, but the decision, while purporting to resolve the appeal in the claimant’s favor, nevertheless indicates that the claimant’s eligibility for benefits will have to be evaluated separately and at a later point in time?  According to a Second Circuit decision handed down on June 7, 2022, an appeal decision that does that does not qualify as a “benefit determination on review,” meaning that once the 45-day deadline passes, the claimant is authorized to commence suit.

Decisions like this draw their support from a core premise, well-grounded in the caselaw, that the requirements (and there are lots of them) imposed on disability insurance companies under the regulations are to be strictly construed (meaning that strict compliance is required).  And as this decision aptly demonstrates, insurance companies that stray from the requirements do so at their own peril.

McQuillin v. Hartford Life & Accident Ins. Co., 36 F.4th 416 (2d Cir. 2022)