A recent Seventh Circuit decision illustrates that pursuing a claim for disability benefits is not as straightforward as claimants would hope, and that claimants must follow ERISA’s requirements to the letter in order to obtain the benefits they deserve. In Schorsch v. Reliance Standard Life Ins. Co., No. 10-3524 (7th Cir. Aug. 28, 2012), Reliance paid Schorsch’s disability benefits for almost 14 years before it denied her claim based on an independent medical evaluation (“IME”). Schorsch’s attorney sent Reliance a letter indicating his intent to appeal the denial, but never submitted a formal appeal. Reliance subsequently sent Schorsch a letter stating that its decision to deny the plaintiff’s benefits was final as she had not filed her appeal within ERISA’s prescribed time frame. Schorsch sued and Reliance revealed during discovery that it had lost the administrative record, including the surveillance that it had conducted of Schorsch. Discovery also revealed that Reliance’s denial letter misrepresented that a particular vocational specialist who in fact never looked at Schorsch’s file issued a report supporting termination of benefits.
The Court ruled in favor of Reliance, holding that Reliance’s loss of the plaintiff’s claim file (and other errors in its claim handling) did not excuse the plaintiff’s failure to file her claim within the required time period. See ERISA Regulations, 29 C.F.R. 2560.503-1(h)(3)(i). The Court stated “Schorsch cannot circumvent ERISA’s administrative remedies by simply pointing to errors in Reliance’s claims termination process. Flaws in Reliance’s termination notice and other errors become relevant only if Schorsch reasonably relied on them in failing to request a review of its decision to terminate her disability benefits…or if Reliance’s missteps denied her meaningful access to a review.” The court ruled that Reliance’s errors were unrelated to Schorsch’s own failure to file a timely appeal.
The Schorsch case illustrates that ERISA can be difficult to navigate, with numerous traps for the unwary and protections favoring insurers. Do not jeapordize the benefits you deserve by venturing into these waters on you own. We at Bonny G. Rafel are experts in this ever-developing area of the law, and will zealously guard your rights as an insured under your ERISA policy.
By Sara E. Kaplan, Esq.