What Happens If You Sue Dearborn Before an LTD Appeal Decision?

In Lisa K. Bunner v. Dearborn National Life Insurance Company (Dearborn), Dearborn denied Plaintiff’s claim for long term disability (LTD) benefits, and she filed an administrative appeal. ERISA requires the Plan Administrator (Plan) to provide the claimant a decision within 45 days of the claimant’s appeal. The 45-day time frame can be extended if the Plan finds that “special circumstances” require an extension. Then, the Plan must provide notice to the claimant that the time has been extended. The extension is not to be longer than 45 days unless the extension “is due to the claimant’s failure to submit requested information, then the period for making the determination on review is tolled until the claimant responds to the request for additional information.”

This is exactly what happened in this case. The Plan informed Plaintiff that it was extending the time for decision on her appeal because it was waiting for her medical providers to send requested medical records. Plaintiff became inpatient and requested the Plan to consider the administrative record closed and make its decision on the evidence it already had. Dearborn said it would comply with this demand, and that the deadline for its decision was July 12, 2018. Plaintiff refused to wait for the decision and filed her lawsuit prematurely on June 2, 2018, prior to exhausting her administrative remedies.

Exhaustion of Administrative Remedies Required Prior to Filing an ERISA Lawsuit

The Court stated that “Plaintiff had an obligation to exhaust her administrative remedies unless it was futile to do so.” To show futility, Plaintiff must show a “certainty of an adverse decision.” Here, an adverse decision was not a certainty since Dearborn was still receiving Plaintiff’s medical records when she filed her lawsuit.

Plaintiff could have supplemented the record with necessary information if she so chose. The Court concluded, “Plaintiff filed her lawsuit early and now asks the court to close the administrative record before Defendants had rendered a final decision. The court declines to do so.”

In order not to penalize her by dismissing her lawsuit, and to give Dearborn a “fair opportunity” to consider the supplemented evidence,” the Court fashioned a remedy consistent with the Fifth Circuit’s policy of encouraging parties to settle their disputes at the administrative level.

Remedy for Filing a Lawsuit During Pendency of Administrative Appeal Will, Upon Motion by Plaintiff, Be Remanded to the Plan

The Court granted “Plaintiff leave to file a motion for remand to the plan administrator…” and stayed the case pending Dearborn’s final decision. If Plaintiff failed to file such a motion, the Court stated that Dearborn may then file a summary judgment motion based on the existing record.

This case was not handled by our law firm, but we believe it can be instructive to those who are impatient with their insurance company that seems to be taking too long to decide on their administrative appeal. If you have any questions about this case, or any other issue concerning your disability claim, either for short-term or long-term benefits, contact one of our attorneys at Dell & Schaefer for a free consultation.