Employer's Delay Means Remedies Deemed Exhausted

July 1, 2011 (PLANSPONSOR.com) – The 9th U.S. Circuit Court of Appeals has overturned a lower court’s ruling that a disability plan participant cannot sue for benefits because he did not exhaust all remedies under the plan.

The court found that the California Association of Professional Firefighters’ Long-Term Disability Plan was required to render a decision within ninety days of David Barboza’s administrative appeal for disability benefits, and since it failed to do so, Barboza’s claims must be deemed exhausted.  

The court noted that as a general rule, an Employee Reitrement Income Security Act (ERISA) claimant must exhaust available administrative remedies before bringing a claim in federal court. However, when an employee benefits plan fails to establish or follow “reasonable claims procedures” consistent with the requirements of ERISA, a claimant need not exhaust because his claims will be deemed exhausted.   

The appellate court agreed with a brief filed by the U.S. Department of Labor Secretary that for disability claims, plans have 45, not 60, days and are eligible to have an extension of an equal duration to make benefits determinations. Only multiemployer plans resolve disability claims at quarterly meetings.  

 The opinion in Barboza v. California Association of Professional Firefighters is here.