Judge Refuses to Overturn Benefits Decision Despite Procedural Foul-ups

February 18, 2005 (PLANSPONSOR.com) - Even while finding that the TPA of an occupational injury benefit plan covered by the Employee Retirement Income Security Act (ERISA) abused its discretion in its claims handling, a federal judge refused to force the TPA to grant the plaintiff benefits.

>According to an EBIA report, the Texas federal judge found that the TPA abused is discretion by not properly warning the plaintiff that her benefits could be cut off and by not properly supplying requested documents. The TPA considered the plaintiff’s letter asking for information on how to appeal the TPA’s decision to cut off her benefits because of deceit and uncooperativeness as the beginning of an actual appeal. That move improperly shortened the amount of time the participant was supposed to have to challenge a benefits decision, the court said.

>Doctors had reported that the plaintiff was exaggerating her injury and was verbally abusive and did not comply with their suggested course of treatment.

>However, despite having found the TPA’s abuse of discretion, the court turned away the plaintiff’s demands that her requested benefits be granted. The procedural violations in the case did not entitle the plaintiff to a substantive remedy unless the violations are continuous and result in prejudice to the plaintiff, the judge ruled.

The court sent the claim back to the TPA for reconsideration. The case is Duncan v. Assisted Living Concepts, Inc. and was heard in the US District Court for the Northern District of Texas.