When Do You Have to Exhaust Administrative Remedies in Life Insurance Claims?

Beneficiaries of life insurance coverage in Chicago whose claims for the life insurance get denied nearly always read a clause at the end of the denial letter informing them they may appeal the decision to deny the claim. For employer sponsored group life insurance coverage, this time to appeal will generally be 60 days from the date you receive the denial, pursuant to 29 C.F.R. 2560.503-1(h)(1)(i). But the denial letters rarely state whether you must appeal the denial, or simply may appeal the decision if you choose. That leaves open the question whether you must do the appeal in order to preserve your rights to file a lawsuit regarding the denial. Most courts have held that yes, you must exhaust the administrative remedies in order to preserve your rights to file a lawsuit under ERISA § 502(a). But one court recently held the opposite, based on the language of the group plan and insurance policy.

In Yates v. Symetra Life Insurance Co., No. 22-1093, 2023 WL 2174840 (8^th Cir. Feb. 23, 2023), Yates’ husband was insured under a group accidental death and dismemberment insurance policy sponsored by his employer, and insured by Symetra Life Insurance Company. Yates’ husband died of a heroin overdose in 2016. After Yates submitted the claim for accidental death benefits, Symetra denied the claim, contending it was the result of an “intentionally self-inflicted injury.” Symetra informed Yates she could request a review of the denial within 60 days. But the written plan documents did not mention the internal review process or that a claimant must request the review before filing a lawsuit under ERISA § 502(a). Yates then sued.

The district court ruled in favor of the insurer because Yates failed to exhaust administrative remedies by not requesting the review, holding claimants must exhaust these remedies before proceeding to litigation. Yates then moved to alter the judgment, and the court reversed itself. Symetra appealed. The United States Court of Appeals for the Eight Circuit affirmed, holding Yates did not need to exhaust administrative remedies before filing the lawsuit. It reasoned all the holdings requiring exhaustion were based on plan language requiring exhaustion before filing a lawsuit, and in this case the plan documents did not even mention any review process. Therefore, Yates was not required to request the review within 60 days before filing a lawsuit. Nevertheless, most group plans do include language requiring you request review before filing a lawsuit, so it would be prudent to obtain copies of the plan documents before deciding to skip the review process and proceed straight to litigation.

If your claim for life insurance or accidental death benefits was denied, speak to an experienced ERISA life insurance attorney immediately to learn how to best protect your rights.