Fair Review of LTD Application Denied by Withholding Documents

May 24, 2004 (PLANSPONSOR.com) - A long-term disability benefit plan administrator must inform a plan participant who has been denied benefits that the participant has the right to review pertinent documents the administrator relied on in determining benefits eligibility, the U.S. District Court for the Northern District of New York ruled.

In a May 20 decision, U.S. District Judge  David Hurd found in favor of the plaintiff in Soron v. Liberty Life Assurance Co. of Boston, N.D.N.Y. who had alleged she was denied a full and fair review of her application for long-term disability benefits.   Janice Soron was not informed by Liberty Life that she was allowed to review the medical evidence against her claim, and therefore did not have an opportunity to rebut such evidence, which she would have done if presented with the contradictory evidence.   Although Liberty Life did not have to provide all evidence, it did have to present the medical evidence used to decide to deny benefits, reported Washington-based legal publisher BNA.

Case History

In March 2000, Soron was diagnosed with rheumatoid arthritis and filed a long-term disability application that included a statement from her physician affirming she was unable to perform the tasks required by her job.   However, this application was denied by Liberty Life in June 2000 when an independent medical examiner stated that Soron had not presented sufficient evidence that she was totally and permanently disabled, BNA reported.

Liberty Life then also denied Soron’s administrative appeal after more independent medical examinations, a functional capacity evaluation, and video surveillance indicated that Soron was not totally disabled.    Although it was agreed she had rheumatoid arthritis, it was not agreed that she was unable to work.  

Soron requested copies of the independent medical examinations and the functional capacity evaluation and filed additional medical evidence supporting her disability claim, but Liberty Life maintained its decision to deny her benefits.   However, the court pointed out, in this final decision, for the first time, Liberty Life told Soron that she was able to request copies of all documents relevant to her claim, according to BNA.

Soron alleged that Liberty Life violated the Employee Retirement Income Security Act (ERISA) by not conducting a full and fair review of her claim for benefits, and for failing to disclose all evidence it collected and used to deny her benefits.  

Court Decision

The court agreed that Liberty Life had not given Soron a full and fair review and then denied Liberty Life’s motion for summary judgment.

According to the court, ERISA regulations required that Liberty Life’s denial notice given to Soron include:

  • the specific reasons for the denial
  • specific references to pertinent plan provisions on which the denial was based
  • a description of any additional material or information necessary for Soron to perfect her claim for benefits; the appropriate information as to the steps she would need to take to submit her claim for review

The regulations also require all internal appeals processes to provide for participants to:

  • make a written request for a review of the claim denial
  • review pertinent documents
  • submit issues and comments in writing

The court said though these regulations do not require that the participant request the documents to review, they do require plan administrators to inform participants of their right to review pertinent documents, which Liberty Life did not do.

The full text of the opinion can be found at  http://www.nysd.uscourts.gov/courtweb/pdf/D02NYNC/04-03862.PDF .