Liberty Mutual must consider disability appeal submitted 2.5 years after denial

A Massachusetts Federal District Court recently entered a very favorable opinion for disability insurance claimants. This case against Liberty Mutual is very fact specific so it does not abolish the 180 day ERISA regulation requirement to submit an appeal in 180 days. This case is an example of how important it is to make sure your disability insurance company is complying with the terms of a disability policy. Disability insurance companies cannot make up their own rules.

Lawyer Files Disability Suit Against Liberty Life

The facts of this long term disability case against Liberty Life were as follows.

Plaintiff last day of work was 11/29/2003. Liberty paid benefits 2/18/04 through 2/18/06, then denied by letter dated 3/14/06. Plaintiff hired a disability attorney who notified defendant on 9/11/06 that they would be filing an appeal but this was not the ERISA appeal. On 2/18/2009 (2.5 years later), the claimant’s disability lawyer filed the appeal. It is unclear why the disability lawyer waited 2.5 years to file the appeal. Liberty stated this appeal was untimely and would not be considered as it was outside 180 days of the 3/14/06 denial letter. A lawsuit was subsequently filed by the claimant demanding that Liberty review the Appeal and make a decision on the merits. Liberty filed a motion to dismiss the lawsuit on the basis that the claimant filed to submit a timely appeal and therefore cannot file a lawsuit.

In most disability denial cases governed by ERISA, a disability claimant is required to submit an Appeal within 180 days or their right to file a lawsuit. In this case the court ruled that the 180 day appeal time limit did not apply. Let’s take a look at the court’s reasoning:

In this case against Liberty, the Summary Plan Description “SPD” and the LTD Policy are separate documents. Under the United States Supreme Court Case of Amara v. Cigna, the terms of the SPD are not the terms of the plan. In Amara, the US Supreme Court stated: “[W]e conclude that the summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan for purposes of ยง 502(a)(1)(B).” In this Liberty mutual case, the Liberty Mutual long term disability policy did not have any language specifying the time limit within which an appeal from a claim denial must be taken. In these circumstances, Liberty acted improperly in refusing to consider Merigan’s appeal of the termination of his LTD benefits on the grounds that the appeal was untimely.

Liberty’s decision that Merigan’s appeal was untimely was incorrect as a matter of law. As a consequence, the argument that the plaintiff failed to exhaust his administrative remedies must fail. The Court specifically reserved the question of what the plaintiff’s remedy should be if his application was timely. Liberty will now be required to review the appeal and make a determination on the merits of the case. This case is a victory for disability claimants.

Click here to read a copy of the Court’s complete opinion.

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