Disability benefit denial lawsuit against Liberty Life and HSBC can proceed
Author: Attorney Alex Palamara
A recent ruling by the United States District Court for the District of Nevada in an ERISA Disability lawsuit allows a claimant a chance for justice after the Federal Court denied multiple motions to dismiss a case that was filed by both Liberty Life Assurance Company and HSBC. Liberty Life and HSBS apparently believed that a disability claimant should not be allowed to file a lawsuit against them after they deny a claim for Disability Benefits. The Court disagreed and has allowed the disability lawsuit to proceed.
Claim History of HSBC Employees Disability Claim Against Liberty Life
The Claimant, a former employee of HSBC North America Holdings, was forced to file a disability claim due to a serious medical condition. Due to her employment at HSBC, the claimant was a covered employee under a Short Term Disability (STD) Plan as well as a Long Term Disability (LTD) Plan. After being unable to perform the duties of her occupation, the claimant filed an application for Short Term Disability Benefits. Unfortunately, Liberty, as administrator of the STD Plan, denied her claim for short term disability benefits. This denial forced the claimant to file an administrative ERISA appeal, which she did in a timely manner. Unfortunately for the claimant, Liberty chose to ignore her “evidence, failed to adequately investigate, and colluded with an unqualified physician to obtain a favorable determination on the medical record review.” Liberty’s actions resulted in the claimant’s appeal being denied as well.
Unfortunately for the claimant, in order to qualify for benefits under the LTD Plan, it was a pre-requisite to receive STD benefits fully. As her administrative options for the STD plan were exhausted, the claimant’s only remaining option was to file an ERISA disability lawsuit.
Liberty Life and HSBC Attempt to Prevent Disability Claimant’s Day In Court
After the claimant filed the long term disability lawsuit on November 29, 2011, both HSBC and Liberty Life moved to dismiss the case arguing that they were not proper parties to be sued. Both companies felt that ERISA only authorizes suits against the benefits plan or the plan administrator. Additionally, Liberty argued that the Plaintiff’s lawsuit for LTD benefits should be dismissed because “Plaintiff failed to submit a claim for determination.” Apparently with this argument Liberty felt that since a formal application for LTD benefits was never made, this lawsuit was premature.
The Court Did Not Buy Liberty’s Argument To Dismiss the ERISA Lawsuit for Disability Benefits
The Court felt otherwise. First, with regards to Liberty’s and HSBC claim that they were not proper parties, the court decided that HSBC and Liberty misconstrued the law. The Court stated that “any party against whom a plaintiff may recover benefits or enforce her rights under the terms of the plan is a ‘logical defendant.’ ‘Logical defendants’ include those entities that have either authority to resolve, or any responsibility to pay, benefit claims.” The Court therefore found both Liberty and HSBC to be logical defendants as both either have the authority to resolve or pay benefit claims.
With regards to Liberty’s claim that the Plaintiff failed to exhaust administrative remedies (file application and administrative appeals if denied), the Court stated that “although ERISA typically requires the exhaustion of administrative remedies, when resort to the administrative route is futile, a court is obliged to exercise its jurisdiction…” In layman’s terms, the Court basically questioned why the claimant should be forced to file an application for LTD benefits when it would just be denied by Liberty because the claimant did not satisfy the requirement that STD be received prior to being allowed LTD benefits.
In essence, Liberty attempted to place the claimant in a black hole with no escape and no resort. Thankfully the Federal Court did not buy it and the case is allowed to proceed. The Motion to dismiss was really nothing more than a delay tactic to prevent this claimant from obtaining disability benefits. While this Motion to Dismiss was favorable for the Plaintiff, a disability claimant should always be cautious when considering filing a lawsuit for LTD benefits without first applying for LTD benefits. Every case has different facts and circumstances which must be considered. Contact our disability law firm for a free consultation and review of your disability insurance claim.