Although some people may only honor this rule of thumb in the breach, most of us understand that it is always advisable to first understand the rules that govern any project or undertaking. Given their complexity, few lawyers would be surprised that this bit of advice is critical in administering benefits plans governed by the Employee Retirement Income Security Act ("ERISA").

This column looks at some of the pitfalls that await plan administrators who fail to heed this advice. Specifically, this column will discuss recent court decisions applying ERISA's "full and fair review" requirement. It will also review cases that address benefit plans' obligations to produce all "relevant" documents during the benefit claims review process. Finally, this column will outline some practical guidance and best practices for plan administrators to consider in light of some of these recent decisions.

BACKGROUND AND STATUTORY GUIDANCE ON "FULL AND FAIR REVIEW"

Before getting into the case developments, some background is helpful to understand the purpose and framework for requiring a benefit claims process.

One of the key policies underlying the enactment of ERISA was ensuring clear and consistent rules for the processing of benefit claims.1 Courts have observed that such pre-litigation processes advance several important goals. Specifically, they "further the overall purpose of [ERISA's] internal review process: to minimize the number of frivolous lawsuits; promote consistent treatment of claims; provide a nonadversarial dispute resolution process; and decrease the cost and time of claims settlement."2

To further emphasize that important tenet, ERISA expressly requires plans to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim."3 Notably, the "full and fair review" requirement applies only "once an adverse benefit determination has been issued," and does not apply to the initial adverse benefit determination.4

And to give additional force and effect to the "full and fair review" obligation the Department of Labor has long since promulgated regulations outlining what constitutes a "full and fair review" for employee benefit plans generally, group health plans, and plans providing disability benefits.5

Thus, to comply with the "full and fair review" requirement, the benefit plan administrator must:

  • Provide the claimant 60 days to appeal an adverse benefit determination;
  • Provide the claimant the opportunity to submit written comments, documents, records, or other information relating to the claim for benefits;
  • Upon request, provide the claimant with reasonable access to and copies (free of charge) of all documents, records, and other information relevant to the claimant's claim for benefits; and
  • Provide for a review that takes into account all comments, documents, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.6

Additional requirements apply both to group health plans and to plans providing disability benefits.7

For example, group health plans are also required to provide for a de novo review, or one that does not afford deference to the initial adverse benefit determination. The review must be conducted by an appropriate named fiduciary of the plan.

In addition, if reviewing an adverse benefit decision that is based in part or in whole on medical judgment, the fiduciary must consult with a health care professional with the appropriate training and experience in the field of medicine involved in the medical judgment.8

More recently, in December 2016, the Department of Labor revised the "full and fair review" requirements as they pertain to disability benefit claims, effective for all such claims filed after January 1, 2018.9 The additional requirements for reviewing disability benefit claims mirror requirements for reviewing group health claims imposed by the Affordable Care Act.10

The Department of Labor explained that the change was necessary to ensure that disability benefit claimants receive the same level of procedural protections as group health plan participants.11 According to these revisions, plans providing disability benefits must require the plan administrator to give the claimant, free of charge, any new or additional evidence considered, relied upon, or generated by the plan. If the plan administrator intends to make an adverse benefit decision, the plan administrator must explain the rationale for that decision and give the claimant adequate time to respond.12

Because these later changes applied only to claims filed after January 1, 2018, federal courts are just now reviewing and interpreting the new language.13

CONSIDERING AND PROVIDING "RELEVANT" DOCUMENTS

For any type of adverse benefit decision, to comply with the "full and fair review" requirement, the plan administrator must additionally determine what constitutes a "relevant" document.14

Importantly, a document is considered relevant if it was either relied upon in making the benefit determination or if it was submitted, considered, or generated in the course of making the benefit determination.15 This latter requirement imposes a broader obligation than just producing the documents the plan administrator may have relied upon in reaching a determination.16

Although the statute does not explicitly require the "production" of these documents, several courts have held that the production of the documents is "implied."17

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Footnotes

1. S. Rep. No. 117 (1993).

2. Spradley v. Owens-Illinois Hourly Employees Welfare Ben. Plan, 686 F.3d 1135, 1140 (10th Cir. 2012) (citation and internal quotation marks omitted).

3. 29 U.S. Code § 1133(2).

4. Id.; William Callas, Thomas Cassese, & Natalie Ferd, v. S&P Global Inc., No. 19-cv-1478, 2022 WL 255114, at *13 (S.D.N.Y. Jan. 26, 2022).

5. 29 C.F.R. § 2560.503-1.

6. 29 C.F.R. § 2560.503-1(h)(2).

7. 29 C.F.R. § 2560.503-1(h)(3-4).

8. 29 C.F.R. § 2560.503-1(h)(3).

9. Claims Procedure for Plans Providing Disability Benefits, 81 Fed. Reg. 243, 92318 (Dec. 19, 2016).

10. Id.

11. Id.

12. 29 C.F.R. § 2560.503-1(h)(4).

13. Id.

14. 29 C.F.R. § 2560.503-1(m)(8).

15. 29 C.F.R. § 2560.503-1(m)(8).

16. Nguyen v. Sun Life Assurance Co. of Canada, No. 14-cv-05295, 2015 WL 6459689, at *2 (N.D. Cal. Oct. 27, 2015).

17. Viani v. Lincoln Nat'l Life Ins. Co., No. 21-cv-00004, 2021 WL 4358729, at *6 (S.D. Cal. Sept. 23, 2021), modified on reconsideration, No. 321-cv-00004, 2021 WL 6075866 (S.D. Cal. Dec. 23, 2021); Nguyen, 2015 WL 6459689, at *2.

Originally published by Employee Relations Law Journal

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.