Help Your Clients Obtain All Available Benefits: Know ERISA Time Limits & Beware of the Closed Record Rule

By: Kaitlyn Barciszewski

As an advocate for clients with disabilities it is important to know about other benefits they may be eligible for. Often, your disabled client will also have a claim for benefits under an individual disability income (IDI) or group long-term disability (LTD) policy that they need to apply for.  Whether you are a social security attorney interested in learning how to help your client obtain these benefits or you prefer to only handle their social security claim, you should be aware of certain regulatory time limits and other rules that apply to your client’s private disability claims.  Knowing the basic timelines and rules applicable to disability insurance claims could save your client from missing the critical evidence-gathering stage altogether.

For this article, I will cover some of the rules applicable to disability claims governed under ERISA, which includes almost all group-disability plans obtained through non-governmental and non-church employers.[1]  Knowing when the record closes for an ERISA case and what time limits apply will ensure that you provide your client advice that will help protect their claim for ERISA disability benefits.  It is important to understand the deadlines imposed by ERISA because the insurance company will deliberately downplay the following information or misinform your client about their rights. 

It’s Too Late to Gather Evidence Once the Insurance Company Issues a Final Denial

The time to prove eligibility for LTD benefits is during the administrative level before an insurance company or plan administrator issues a final denial.  Often it is not a good idea for a claimant to handle their ERISA appeal on their own and then hire an attorney after a final denial because of the “closed record” rule.  Although not set out in ERISA or its implementing regulations, this court-created rule strictly mandates that the ERISA record, the record the court ultimately reviews to make its decision, closes when the claim administrator issues a final decision.  There are only a few very limited exceptions to this “closed record” rule that vary from circuit to circuit.  Thus, it is important to ensure that all evidence is submitted on appeal before a final denial is issued.  Most claimants are unaware of the “closed record” rule and do not submit adequate evidence for an attorney to take their case to court. Therefore, hiring an attorney early in the appeal process is best to ensure that all the applicable evidence is submitted and included in the ERISA record.

Not only do you want to make sure that your client has submitted all the evidence before the ERISA record closes, but you want to make sure that your client is also submitting the proper responsive evidence to make sure they have a good court case. The often-applicable discretionary standard of review is a related reason why it is crucial to build a strong record during the administrative appeals stage and not wait for some non-existent later opportunity to show why the insurance company was unreasonable.

Because of the Supreme Court’s decision in Firestone Tire & Rubber Co. v. Bruch, the standard of review that applies in most cases under ERISA is the arbitrary and capricious standard of review. 489 U.S. 101, 111(1989).  Under this deferential standard, courts will uphold a benefit determination only if it is “rational in light of the plan’s provisions.” Univ. Hosps. of Cleveland v. Emerson Elec. Co., 202 F.3d 839, 846 (6th Cir. 2000) (internal quotations and citations omitted).  Because of the broad deference courts must give to the denial decision under this standard, developing quality evidence during the administrative stage is critical to increasing odds of litigation success.

Because the ERISA record closes at the time of the final denial and the court may review the case under an arbitrary and capricious standard of review, make sure that your client has submitted all the necessary and responsive evidence before a final denial is issued or that they have an ERISA attorney on their side ensuring the correct evidence is submitted.

Know Administrative Time Limits to Make the Most of the Evidence-Gathering Stage

Knowing the time limits that apply to ERISA claims during the administrative level will help you advise clients accurately and know when it makes the most sense for them to obtain experienced legal help.  The ERISA regulations set most of the relevant time limits.  ERISA empowers the Department of Labor to make regulations as necessary to govern the claims administration process. The procedural rules for insurance claims governed under ERISA are located at 29 C.F.R. § 2560.503-1 and were last updated in 2018.  The updated regulations provide more relief and guidance for claimants than their predecessors, but if a deadline is missed, usually the case cannot move forward.

As a social security attorney, it is best to ask your client if they have a claim for long term disability benefits as early as possible.  If your client is only in the beginning application stage of their LTD claim, you should inform your client that they should review the deadlines in their plan to ensure that they are not missing any application deadlines. The regulations allow the LTD policy or plan to set the time limit for when a claimant must submit a request for benefits. See 29 C.F.R. § 2560.503-1(e) (“a claim for benefits is a request for a plan benefit or benefits made by a claimant in accordance with a plan’s reasonable procedure for filing benefit claims.”).  Usually, plans require claimants to submit proof of disability no later than 30 days after the date of the loss on which the claim is based.  But because the plan controls, it is important to check the plan’s time limits for submitting a claim as soon as possible as the time limits can be short.

If your client has received an initial denial of LTD benefits, there are several time limits and procedural rules that become relevant to your client.  This is the best time for your client to obtain an experienced ERISA attorney’s help with appealing the denial before the ERISA record closes. 

Once an initial denial is issued, the claim regulations establish minimum time limits that an insurance company must provide a claimant to appeal.  If a claimant does not appeal within the time limits, her claim will likely be denied for failure to exhaust administrative remedies.  According to 29 C.F.R. §§ 2560.503-1(h)(3)(i) and (4), a claimant must be given at least 180 days to appeal.  A common and unfortunate reality is that claimants often rush to submit an appeal after being told by the insurance company that it is a simple re-evaluation process, that they can just fill out a provided appeal form, etc.  This could be fatal because the claim administrator could issue a final denial before any evidence supporting the appeal is submitted.

After an “appeal” is submitted (even if it is just a hand-written letter saying, “I appeal”), the claim regulations mandate that the insurance company must make a decision on appeal within 45 days, which can be extended an additional 45 days if special circumstances exist. §§ 2560.503-1(i)(1)(i) and (3).[2]  If the decision is not made on time, it is “deemed exhausted” and the claimant may then file a lawsuit to pursue any available remedies under section 502(a) of ERISA on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. § 2560.503-1(l).

Despite the 180-day appeal deadline and 45-90-day decision deadlines established by the regulations, the 2018 amendments require an opportunity be granted to the claimant to review and respond to any new evidence and/or rationales generated by the insurance company on appeal.  While the regulations state that such evidence and/or rationale “must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required … to give the claimant a reasonable opportunity to respond prior to that date”, the reality is that what counts as a “reasonable opportunity” is undefined and often, insurers provide very short deadlines to claimants who do not know to ask for extensions. § 2560.503-1(h)(4).  Courts are just now starting to address this issue and further define what amount of time is considered “reasonable.” See, e.g., Walker v. AT&T Benefit Plan No. 3, No. 2:21-CV-00916-MCS-SK, 2022 WL 1434668, at *5 (C.D. Cal. Apr. 6, 2022), aff’d, No. 22-55450, 2023 WL 3451684 (9th Cir. May 15, 2023) (“Here, a five day period to respond to two new Transferable Skill Assessments is not reasonable.”).  Knowing that insurance companies are giving such short time periods to exercise this new right, it’s important to keep in mind that many unrepresented claimants may not be benefiting from the full protections established by the 2018 regulation amendments.  

The opportunity to review and respond to new rationale and evidence generated by the insurance company is a major improvement provided by the 2018 amendments.  It provides claimants with one last shot to prove their entitlement to LTD benefits with new evidence, usually in the form of doctor or expert responses to the insurance company’s conclusions.  But without knowing that it is their last opportunity to add evidence to the record, or that they can ask for more time than the unreasonable amount granted by the insurer, unrepresented claimants often miss this crucial opportunity and right granted by the updated regulations. An experienced ERISA attorney would help ensure that the new regulatory protections are taken full advantage of to increase the odds of a successful appeal or case in court.

Knowing the rules that work against claimants with LTD claims falling under ERISA and the time limits that apply during the administrative stage, here is a list of mistakes that you can help your client avoid:

Mistakes to Avoid:

• Failing to submit all the information to support a claim as part of the appeal process. Because the record closes when a “final denial” (usually the second denial) is issued by the insurance company, claimants cannot usually add new evidence to support the claim after the claim has been denied for the final time.

• Assuming that medical records are enough to show that a claimant is disabled. Many clients who appeal on their own tell us, “but I submitted all my medical records!” That is usually not enough. Instead, gather documentation of specific restrictions and limitations. An experienced ERISA attorney will have forms that are targeted to obtain this information.

• Missing the opportunity to review and respond to the insurance company’s new rationale or evidence on appeal.  Don’t miss the chance to let treating doctors respond to the insurer’s file-reviewing physicians or nurses!  And don’t feel like you have to always work within the short deadlines given by the insurance company. Know when to request an extension. This last opportunity is crucial.

• Ignoring the insurance company’s or plan administrator’s deadlines. Sometimes a case is lost, and can never be won, simply because the client missed the appeal deadline contained in the insurance company’s letters and in the plan. Once a deadline is missed, usually the case cannot go forward.

• Waiting until after a claim has been denied a second time before hiring an attorney! To avoid the mistakes listed above, make sure your client hires an experienced ERISA attorney as soon as possible, so that the attorney can help get all the necessary and responsive evidence in the record, and help with other problems that often come up.

How Social Security and ERISA Attorneys Can Work Together to Improve Outcomes for the Client:

• If you refer an ERISA case to an attorney, the best time to do so is usually when the client has received an initial denial from the insurance company.  But sometimes, it might make sense to get an ERISA attorney involved at the application stage if the medical facts are particularly complex or the insurance company is taking too long to make a decision.

• Attorneys can share helpful medical records, opinion evidence, and vocational reports. This can reduce the cost for your client by not having to request and pay for medical records and opinions twice.

• Attorneys can share favorable decisions to submit as evidence of disability.

For the reasons stated above, plus many more not included in this article, it is important to help your client identify if they have other benefits that they may be eligible for.  One of those benefits is LTD benefits which have quick deadlines under ERISA and a tricky “closed record” rule. It is important to set your client up for success by helping them obtain an ERISA attorney before it is too late and benefits are lost.

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[1] For a more detailed discussion on whether ERISA applies to your client’s claim, we have several newsletters that cover this topic on our website at buchanandisability.com.

[2]  For a detailed discussion on what counts (and what should not count) as special circumstances, we have newsletters that cover this topic on our website at buchanandisability.com.

This is a guest column. The views expressed in this column are the views of the author alone, and do not represent the views of NOSSCR, NOSSCR’s leadership, or NOSSCR’s staff.