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Hartford Denies Disability Benefits and Then Has Claimants Lawsuit Dismissed for Failure to Submit Appeal

Hartford claims that the disability claimant did not properly submit an ERISA Appeal and therefore her lawsuit should be dismissed. A recent decision by United States District Court, Eastern District of Arkansas highlights how important it is for long-term disability claimants to exhaust the entire appeals process with the disability insurance company before filing an ERISA lawsuit.

When Mattie William’s Arkansas disability insurance attorney filed an action against Hartford Life and Accident Insurance Company (Hartford), her disability lawyer challenged the calculation of William’s disability benefits under the Tenneco Automotive Operating Co. Inc. Non Union Hourly Employees Group Benefit Plan (the “Plan”). Unfortunately for Williams’, she had never brought this issue up with Hartford during the appeals process that was available to her when Hartford terminated her disability insurance benefits. Instead, she had taken her claim straight court.

Hartford moved that the court dismiss William’s Complaint because she had failed to exhaust her administrative remedies required by ERISA. William’s ERISA attorney failed to respond to this motion, so the court granted Hartford’s motion to dismiss.

Legal Foundation For Court’s Decision

While this decision was reached in the Eighth Circuit, similar rulings have been made all across the country. There were numerous disability insurance cases that the Court quoted when it found that Williams should have exhausted all the benefit appeals provided for in the disability benefit plan.

  • In the decision rendered in Midgett v. Washington Group Intern. Long-term Disability Plan , the Court found that the requirement to exhaust the appeals process with the insurance company minimizes “the number of frivolous ERISA lawsuits, promote(s) the consistent treatment of benefit claims, provide(s) a nonadversarial dispute resolution process, and decrease(s) the cost and time of claims settlement.”
  • In the same case, the Court had found that speculative claims of futility were insufficient to waive the requirement that a claimant exhaust his or her administrative remedies before bringing a claim before the Court.
  • In Kinkead v. Southwestern Bell Corporation Sickness & Accident Disability Benefit Plan, the Court found that requiring claimants to exhaust the appeals process “enhances the ability of trustees to interpret plan provisions and helps assemble a factual record which will assist the court in reviewing the claim denials.”
  • In Wert v. Liberty Life Assur. Co. of Boston, the Court found that requiring exhaustion gave “claim administrators an opportunity to correct errors,” promote “consistent treatment of claims,” provide “a nonadversarial dispute resolution process,” and decrease “the cost and time of claims resolution.”
  • In Back v. Danka Corp., the Court found that “exhaustion permits an employer, or its plan, to obtain full information about a claim for benefits, to compile an adequate record, to make a reasoned decision, and offers the reviewing court a factual predicate upon which to proceed.”

William’s disability benefits plan fell under the jurisdiction of ERISA. This meant that she had to exhaust her administrative remedies. Failure to do so meant that her claim for relief under ERISA was barred from being heard by the Court.

William’s ERISA attorney failed to demonstrate that exhausting those remedies would have been futile, as required by Wert. The attorney also failed to dispute Hartford’s assertion that Williams had failed to challenge the calculation of her disability benefits before she took her claim to court. Because of these two factors, the Court ordered that Williams’ action for relief under ERISA be dismissed without prejudice for failure to exhaust.

What is the primary lesson to be learned from this case? If a claim is governed by ERISA, a disability insurance claimant should always file an appeal and exhaust their administrative remedies.

Another lesson to be learned from this case is the importance of hiring an ERISA attorney before the time for administrative appeals has passed. While the client cannot recover attorney’s fees for the cost of assistance during the administrative appeals process, having the guidance of an experienced ERISA attorney during this stage can prevent a situation similar to this case.

An experienced ERISA attorney guides the claimant through the process of collecting the right medical information to confirm the existence of the disability. An ERISA attorney can also detect when a disability insurance plan is failing to follow a reasoned decision making process. This can assist in the preparation of a solid claim that can be brought before the Courts. Learn more about important factors to consider in an ERISA Appeal.

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