Employees in Chicago who have been receiving long-term disability benefits for a long time usually expect those benefits will continue until the maximum duration of the long-term disability insurance policy. That age is typically Social Security Normal Retirement Age. Few contemplate the insurer may terminate their benefits years after approving the claim, but it happens for a variety of reasons. Some reasons are a change in the definition of disability, application of a 24-month limitation on the type of claim, or that the insurer just suddenly contends you are not disabled any more. Few people question which version of claim regulations apply to their claim, though, which is an important question following updates to the ERISA claim procedure regulations, 29 C.F.R. § 2560.503-1, in 2018. In a recent case, the insurer failing to comply with the updated regulations triggered the claimant winning the case.
In Zall v. Standard Insurance Co., No. 22-1096, 2023 WL 312368 (7th Cir. Jan. 19, 2023), Zall worked as a dentist until going on disability leave in 2013 due to chronic pain in his neck and arm. Zall stayed on disability leave until 2019, when Standard Insurance Company terminated his benefits, contending a 24-month limitation applied to his claim. That limitation limited benefits for disabilities caused or contributed to by carpal tunnel syndrome or repetitive motion syndrome. Standard terminated the benefits after obtaining an opinion from a medical consultant, which it did not provide to Zall before terminating his benefits. Zall sued for benefits under ERISA § 502(a).
In 2018, the Department of Labor updated ERISA’s claim procedure regulations to require that before terminating disability benefits, the administrator must provide a copy of any new evidence for review and comment by the claimant. Standard did not do this because it contended the 2002 version of regulations applied to Zall’s claim, which were the ones in effect when his claim began. The United Stats Court of Appeals for the Seventh Circuit held the applicable regulations are those in effect at the time of the adverse benefit determination, or when Standard terminated the disability benefits. It rejected Standard’s argument that Zall waived this argument by failing to raise it in his complaint, explaining the Federal Rule of Civil Procedure 8 does not require pleading legal theories in a complaint. The court thus ruled in Zall’s favor, but remanded the claim to Standard to provide Zall the opportunity to review and comment Standard denied him, and declined to substantively review whether to overturn the benefit termination.
If an insurance company terminated your long-term disability benefits talk to an experienced long-term disability lawyer immediately to ensure the insurer did not violate your rights to a full and fair review.