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Reliance’s Delay in Denying Disability Claim May Affect Standard of Review

In Fessendon v. Reliance Standard Life Insurance Company, plaintiff’s claim for long term disability benefits under an ERISA governed plan was denied. There is a dispute between the parties as to whether the court should apply an abuse of discretion standard or a de novo review. Plaintiff filed a motion arguing that the court should review his ERISA claim de novo since Reliance did not issue its denial of his claim within the time required under ERISA. Reliance claimed it substantially complied with ERISA time requirements, so an abuse of discretion standard should still apply to the review.

After briefing was complete, but before the court issued its order, a Second Circuit case was published discussing in depth the doctrine of substantial compliance in ERISA cases. The Court did not issue a decision, but directed the parties to file briefs discussing how the new case applies.

Undisputed Facts

Reliance provided disability insurance benefits to plaintiff, an employee of Oracle America, Inc. The policy had a clause giving Reliance “discretionary authority to interpret the Plan and the insurance policy and determine eligibility for benefits.” Reliance’s decision is “complete, final and binding on all parties.” Generally, when a policy has such a clause and a plaintiff files an ERISA lawsuit after a denial, the court reviews the plan’s denial of a claim under an abuse of discretion standard and will only reverse the decision if it was arbitrary and capricious.

In this case, Plaintiff was granted short term disability by Reliance, but his claim for long term benefits was denied and Plaintiff appealed. The appeal was denied a few days after the deadline by which it was required, under ERISA laws, to issue its decision. While waiting for the decision, the plaintiff filed the ERISA lawsuit claiming her appeal was deemed denied since Reliance had missed its deadline.

The court, in a footnote, agreed with plaintiff that Reliance missed the deadline for deciding his claim. The question was what affect that had on the applicable standard of review. Normally, a discretionary clause such as the one Reliance had in the policy would trump de novo review. But, since Reliance missed its denial deadline, plaintiff argued his claim was “deemed denied” which allowed the court to apply the higher standard of review.

De Novo Review is Triggered When the Plan Missed the ERISA Established Decision Deadline

In his argument for de novo review, the plaintiff relied on a Second Circuit case which held that when a plan administrator misses a decision making deadline, the claim is deemed denied which triggers de novo review even if the plan has a discretionary clause. De novo review allows the court to make its own decision on whether a claimant qualifies for disability benefits without giving deference to the plan administrator’s decision. Of course, Reliance argued that it had substantially complied and therefore, the abuse of discretion standard should still apply. The plaintiff disagreed with Reliance’s substantial compliance argument.

Substantial Compliance

After briefing was complete, the Second Circuit published a case discussing the application of substantial compliance to a situation similar to the one before the court. Hence, the court did not make a ruling, but required the parties to provide briefing on what affect the newly-decided case had on their situation.

This case is not being handled by our office, but we believe it is instructive for those who have a dispute concerning the proper standard of review. If you have a question about a similar matter, or any matter relevant to your disability claim, contact one of our lawyers for a free consultation and case evaluation.

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Questions About Hiring Us

Do you help Reliance Standard claimants nationwide?

We represent Reliance Standard clients nationwide and we encourage you to contact us for a FREE immediate phone consultation with one of our experienced disability insurance attorneys.

Can you help with a Reliance Standard disability insurance policy?

Our disability insurance lawyers help policy holders seeking short or long term disability insurance benefits from Reliance Standard. We have helped thousands of disability insurance claimants nationwide with monthly disability benefits. With more than 40 years of disability insurance experience we have helped individuals in almost every occupation and we are familiar with the disability income policies offered by Reliance Standard.

How do you help Reliance Standard claimants?

Our lawyers help individuals that have either purchased a Reliance Standard long term disability insurance policy from an insurance company or obtained short or long term disability insurance coverage as a benefit from their employer.

Our experienced lawyers can assist with Reliance Standard:

  • ERISA and Non-ERISA Appeals of Disability Benefit Denials
  • ERISA and Non-ERISA Disability Benefit Lawsuits
  • Applying For Short or Long Term Disability Benefits
  • Daily Handling & Management of Your Disability Claim
  • Disability Insurance Lump-Sum Buyout or Settlement Negotiations

Do you work in my state?

Yes. We are a national disability insurance law firm that is available to represent you regardless of where you live in the United States. We have partner lawyers in every state and we have filed lawsuits in most federal courts nationwide. Our disability lawyers represent disability claimants at all stages of a claim for disability insurance benefits. There is nothing that our lawyers have not seen in the disability insurance world.

What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, GoToMeeting.com sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

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I contacted the law firm of Dell & Schaefer just to check and see if there was a possibility to settle my claim with UNUM and get a lump sum buyout. BEST decision I have ever made! Cesar called me within 24 hours of me sending a email and he discussed my claim in detail with me. Let me tell you, he not only discussed my claim detail but discussed my future plans and diagnosis, he wanted to make sure the settlement was the right option for my case. We decided to move forward with an offer to Unum for the buyout and within three weeks we had an offer. The offer that Cesar negotiated was not only fair but much more than I expected. And the best thing of all, I no longer have to deal with those monthly phone calls and interviews and having someone harass my doctors.

I do not want to forget Mr. Gavidia’s assistant, Anneli Decardenas. She kept me up to date on every aspect of the case, no I did not have to call to get information, Anneli kept me informed. If I did send in a request for information I received a prompt response. Best law firm I have ever had the pleasure to have represent me. Last but not least, I did crunch the numbers and accessed my long term payments against the settlement offer, I can tell you my outcome was very fair.

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