The main issue in Stevens v. Sun Life and Health Insurance Company is whether a claimant’s refusal to attend an IME means the administrative remedies have not been exhausted so that a subsequent ERISA lawsuit must be dismissed. The controversy began when Sun Life terminated Stevens short-term disability about the same time that she filed a claim for long-term disability benefits. This claim was denied and she appealed. Her appeal was denied and she requested reconsideration.
During the process of the Sun Life’s reconsideration of the appeal denial, it requested the plaintiff to undergo an independent medical exam (IME). Although she asserted that Sun Life had no right to ask this of her during the pendency of the appeal, her attorney wrote to Sun Life that he would agree for his client to submit to the IME with certain conditions: “if it is performed by a truly ‘neutral’ doctor upon whom we agree and if the entire IME is videotaped by a witness accompanying Mrs. Stevens.”
When the parties could not agree on a neutral doctor who would provide the exam and agree to be videotaped, Stevens filed the lawsuit. Sun Life moved to dismiss the court case since Stevens had not exhausted her administrative remedies. Stevens argued that according to the policy terms, Sun Life had no right to require an IME after it had denied her claim and an administrative appeal was pending.
Court Rules Administrative Appeals Were Not Exhausted Even Though Both Interpretations of the Policy Regarding IMEs are Reasonable
The Court found that “The terms do not specifically state whether a claim remains pending after the claims administrator issues an initial adverse determination.” It noted that plaintiff had provided additional medical evidence during the administrative appeal. This made Sun Life’s request for an IME reasonable. On the other hand, there was a “strong argument that Stevens’ interpretation of the terms of the plan, however, is reasonable.”
After analyzing dates of Sun Life’s request and plaintiff’s attorney’s responses, the Court held that the plaintiff had not exhausted here administrative remedies prior to filing suit. Ordinarily, this would have resulted in a dismissal of the lawsuit. But, in this case, the Court found it could waive the administrative exhaustion requirement.
Alabama Federal District Court, in This Case, Waives the Administrative Exhaustion Requirement
Relying on precedent, the Court held that “the court may waive the administrative exhaustion requirement,” particularly when “resort to administrative remedies would be futile or the remedy inadequate.” While the case was pending in the district court, Sun Life denied the plaintiff’s reconsideration request for benefits based on her refusal to attend the IME. Therefore, the Court held that “any attempt by Stevens to exhaust her administrative remedies at this point is futile.” The Court added a comment that “it is arguable that the terms of the policy regarding the right to an independent medical examination on administrative appeal in this case are ambiguous.”
This case was not handled by our firm, but we believe it can be instructive to those struggling with demands from their disability insurers for an IME during the pendency of their administrative appeal. If you have any questions about this issue, or any aspect of your disability claim, feel free to contact one of our attorneys for a free consultation.