Insurer reinstating ERISA claim doesn’t reset response-time clock - 2nd Circ

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  • An outcome that does not determine benefits cannot be a benefit determination, the appeals court panel said
  • Insurer had convinced lower court to toss suit filed while it was reconsidering long-term disability claim

June 8 - A federal appeals court revived a former surgical-equipment salesman’s lawsuit against Hartford Life and Accident Insurance for denying his claim for long-term disability benefits, even though the company was still considering his appeal when the suit was filed.

The 2nd U.S. Circuit Court of Appeals reversed Tuesday a lower-court judge’s dismissal of John McQuillin’s lawsuit for failure to exhaust his employee-benefit plan’s internal appeals process.

Federal regulations only required McQuillin to wait 45 days for Hartford Life to issue a “benefit determination” after he challenged its initial denial, and he had filed his lawsuit on day 46, Senior Circuit Judge John Walker Jr wrote for the 2nd Circuit.

Hartford Life’s attorneys at Robinson & Cole argued that it met the 45-day deadline by “overturning” its previous denial, and telling McQuillin it would reconsider his claim, 12 days after he filed his internal appeal; and that McQuillin was therefore barred from filing suit until the company finished its review.

A federal judge on Long Island agreed with Hartford last year, saying the company’s response was a “benefit determination” even though it did not determine whether McQuillin would receive benefits. The 2nd Circuit disagreed.

“An outcome that does not determine benefits cannot be a ‘benefit determination,’” Walker wrote, joined by Senior Circuit Judges Guido Calabresi and Jose Cabranes. Otherwise, employee-benefit plans “could render the 45-day limit meaningless” and “allow for multiple remands, delaying resolution indefinitely,” the panel added.

The decision allows McQuillin to proceed with his lawsuit, in which he claims Hartford violated the Employee Retirement Income Security Act of 1974 (ERISA) by denying him long-term benefits after prostate cancer made him unable to work as a surgical-device sales rep.

Beyond giving McQuillin “his day in court,” lead lawyer Jeffrey Delott said the most significant aspect of the decision is the court’s insistence on strict compliance with the 45-day regulation.

The U.S. Labor Department, which issued the regulation, filed an amicus brief supporting McQuillan’s appeal.

Hartford and its attorneys did not immediately respond to requests for comment. Their appellate brief defended the district court’s ruling.

The American Council of Life Insurers filed an amicus brief supporting Hartford. It said claims administrators need flexibility, especially when a claimant adds extensive information to support his or her internal appeal.

However, the 2nd Circuit said the regulation already provides options to extend the deadline, and that Hartford did not use those options in McQuillin’s case.

The case is John McQuillin v. Hartford Life and Accident Insurance Co., 2nd U.S. Circuit Court of Appeals No. 21-1514.

For McQuillin: Jeffrey Delott, Law Offices of Jeffrey Delott; John DeHaan, The DeHaan Law Firm

For Hartford Life: Patrick Begos and Linda Morkan of Robinson & Cole

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