Timing of Denial of Your Long-Term Disability Appeal Affects Standard of Review

Employees in Chicago with denied claims for long-term disability under an employer’s group disability insurance policy, enforced under ERISA § 502(a), need to hawk the insurer’s compliance with time deadlines. Whether the insurer complies with deadlines affects your ability to enforce your rights.

The Abuse of Discretion Standard of Review

If your insurance policy contains a discretionary clause, the court will review your denial under a deferential standard of review, called “abuse of discretion,” or “arbitrary and capricious.” Here is a good resource to understand the difference. Many states ban such clauses, like Illinois. See 50 Ill. Adm. Code § 2001.3. But many states still do not, and whether the state law banning those clauses applies will generally depend on where the policy was issued, not necessarily where you live or work.

Deadlines for Insurers to Preserve Deferential Standards of Review

If ERISA applies, the insurer must comply with the federal regulations in order to preserve its right to a deferential standard of review. The most important of these is making their decision on your appeal within the specified amount of time. They generally must issue a decision in no more than 90 days, which includes the initial 45-day deadline, and up to one 45-day extension for special circumstances. Here is a discussion on those “special circumstances.”

Evidence the Insurer Did Not Comply with Deadlines

It will not be enough that you say you did not get the letter. If you do get the letter, always photograph the envelope for indication of the day it was post-marked. Insurers frequently upload their decisions on the deadline, but do not mail them out until days later. In Slane v. Reliance Standard Life Insurance Co., No. 20-cv-3250, 2021 WL 1401761 (E.D. La. Apr. 14, 2021), Canter suffered from migraines and dizziness. The court would not grant Reliance Standard’s motion to determine it preserved the standard of review because Reliance had no evidence it actually mailed the letter out by the deadline.

If an insurer denied your long-term disability claim, consult an experienced long-term disability lawyer. If you wait until you have to file a lawsuit, you may lose out on rights.