One of the more controversial requirements under ERISA is that every participant seeking redress for an unlawfully denied benefit under an ERISA plan must first submit to an administrative review procedure maintained by the ERISA plan. Failure of the participant to exhaust these administrative review procedures within specified timeframes may result in the participant being denied access to the courts. Moreover, if a participant submits to the plan’s administrative review procedures and loses (i.e., the claim is again denied), and files a claim in court, the court may presume the correctness of the plan administrator’s decision absent a finding that the decision was arbitrary and capricious.
The rationale for the administrative claims review requirement is that it provides for a non-adversarial method of claims administration, and reduces the number of frivolous lawsuits. Thus, in cases where the administrative review procedures are properly utilized in good faith, they serve a valuable purpose. To maintain the integrity of the administrative review requirement, the U.S. Department of Labor (“DOL”) has promulgated extensive regulations setting forth minimum standards that must be satisfied. There is also a substantial body of case law regarding the proper application of ERISA’s administrative claims review procedures.
Following is a general discussion of the ERISA administrative claims review requirement, applicable DOL regulations, and relevant case law.
ERISA Section 503
ERISA Section 503 mandates that, in accordance with DOL regulations, every plan covered by ERISA must:
1. Notify participants and beneficiaries in writing of any denial of a claim for benefits, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant; and
2. Afford participants a reasonable opportunity for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
1. Notify participants and beneficiaries in writing of any denial of a claim for benefits, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant; and
2. Afford participants a reasonable opportunity for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
Reasonable Claims Procedures Under DOL Regulations
DOL regulations require that every ERISA plan establish and maintain reasonable procedures governing:
1. The filing of benefit claims;
2. Notification of benefit determinations; and
3. Appeal of adverse benefit determinations.
A plan’s claims procedures must meet five requirements in order to be deemed reasonable. The procedures must:
1. Comply with regulatory requirements pertaining to:
a. The procedures appropriate for the type of benefit claim (i.e., health, disability or pension plan);
b. What constitutes a “claim for benefits” for purposes of the administrative review requirement;
c. The timing of notification of benefit determinations;
d. The manner and content of the notification of benefit determination;
e. Appeal of adverse benefit determinations;
f. The timing of notification of benefit determinations on review; and
g. The manner and content of notification of benefit determinations on review.
2. Be described in the summary plan description (SPD), which must be provided to all participants under ERISA Section 102;
3. Not unduly hamper the initiation or processing of claims;
4. Not limit a person’s ability to authorize a representative to act on his or her behalf; and
5. Contain administrative processes and safeguards designed to ensure that benefit determinations are made according to the terms of the plan and are consistently applied to similarly situated claimants.
Additional requirements apply to group health plans and plans providing disability benefits. Three such requirements apply to both group health and disability benefits. A fourth requirement applies only to group health plans.
The three additional requirements that apply to group health plans and plans providing disability benefits are:
1. No more than two administrative appeals may be required before the claimant is permitted to file a civil suit in court;
2. To the extent the plan offers voluntary levels of appeal in addition to the two maximum appeal levels, the claims procedures must provide that:
a. The plan waives any right to assert that a claimant has failed to exhaust administrative remedies because the claimant did not elect to submit a benefit dispute to any such voluntary level of appeal;
b. Any statute of limitations or other defense based on timeliness is tolled during the time any such voluntary appeal is pending;
c. The claimant may only elect the voluntary levels of appeal after the two maximum levels;
d. The plan provides the claimant, upon request, sufficient information relating to the voluntary level of appeal to enable the claimant to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal; and
e. No fees or costs are imposed on the claimant as part of the voluntary level of appeal.
3. No mandatory arbitration is required, unless the arbitration is conducted as one of the two maximum levels of appeal.
The fourth requirement that applies only to group health plans is:
4. In the case of pre-service claims (i.e., a claim for a benefit with respect to which pre-authorization is necessary in advance of obtaining medical care), if the claimant or an authorized representative fails to follow the plan’s procedures, the claimant or representative must be notified of the failure and the proper procedures to be followed. This notification must be provided as soon as possible, but not later 5 days (24 hours in the case of an urgent care claim) following the failure.
1. The filing of benefit claims;
2. Notification of benefit determinations; and
3. Appeal of adverse benefit determinations.
A plan’s claims procedures must meet five requirements in order to be deemed reasonable. The procedures must:
1. Comply with regulatory requirements pertaining to:
a. The procedures appropriate for the type of benefit claim (i.e., health, disability or pension plan);
b. What constitutes a “claim for benefits” for purposes of the administrative review requirement;
c. The timing of notification of benefit determinations;
d. The manner and content of the notification of benefit determination;
e. Appeal of adverse benefit determinations;
f. The timing of notification of benefit determinations on review; and
g. The manner and content of notification of benefit determinations on review.
2. Be described in the summary plan description (SPD), which must be provided to all participants under ERISA Section 102;
3. Not unduly hamper the initiation or processing of claims;
4. Not limit a person’s ability to authorize a representative to act on his or her behalf; and
5. Contain administrative processes and safeguards designed to ensure that benefit determinations are made according to the terms of the plan and are consistently applied to similarly situated claimants.
Additional requirements apply to group health plans and plans providing disability benefits. Three such requirements apply to both group health and disability benefits. A fourth requirement applies only to group health plans.
The three additional requirements that apply to group health plans and plans providing disability benefits are:
1. No more than two administrative appeals may be required before the claimant is permitted to file a civil suit in court;
2. To the extent the plan offers voluntary levels of appeal in addition to the two maximum appeal levels, the claims procedures must provide that:
a. The plan waives any right to assert that a claimant has failed to exhaust administrative remedies because the claimant did not elect to submit a benefit dispute to any such voluntary level of appeal;
b. Any statute of limitations or other defense based on timeliness is tolled during the time any such voluntary appeal is pending;
c. The claimant may only elect the voluntary levels of appeal after the two maximum levels;
d. The plan provides the claimant, upon request, sufficient information relating to the voluntary level of appeal to enable the claimant to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal; and
e. No fees or costs are imposed on the claimant as part of the voluntary level of appeal.
3. No mandatory arbitration is required, unless the arbitration is conducted as one of the two maximum levels of appeal.
The fourth requirement that applies only to group health plans is:
4. In the case of pre-service claims (i.e., a claim for a benefit with respect to which pre-authorization is necessary in advance of obtaining medical care), if the claimant or an authorized representative fails to follow the plan’s procedures, the claimant or representative must be notified of the failure and the proper procedures to be followed. This notification must be provided as soon as possible, but not later 5 days (24 hours in the case of an urgent care claim) following the failure.
Adequate Notice of Benefit Determination
ERISA Section 503, as stated above, specifically mandates that a plan administrator must provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied. The DOL regulations provide detailed guidance regarding what constitutes “adequate notice” for purposes of ERISA Section 503.
Types of claims determinations that require notice under ERISA Section 503
ERISA Section 503 does not require that a participant or beneficiary be provided notice of every determination made by the plan administrator regarding benefits. Rather ERISA Section 503 and the DOL regulations only regulate certain types of benefit determinations, as more fully discussed below.
1. Adverse Benefit Determinations
Any time there is an adverse benefit determination, a participant must be given notice of the claim denial in accordance with DOL regulations. For this purpose, the term “adverse benefit determination” means a denial, reduction or termination, or a failure to provide or make payment (in whole or in part) for, a benefit. Examples of adverse benefit determinations include:
a. Denial of a participant’s eligibility for a benefit;
b. Failure to pay any part of a claim for medical benefits as a result of the application of a plan’s utilization review procedures;
c. Failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary.
2. Benefit Determinations With Respect To Urgent Care and Pre-Service Claims
Some claims are deemed to be so sensitive that a plan administrator is required to provide notice of a benefit determination even if it is not adverse. This is true of urgent care and pre-service claims.
(a) Urgent Care Claims
A plan administrator must notify a participant of any benefit determination regarding an urgent care claim (whether adverse or not). A claim involving urgent care is any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations –
1. Could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function; or
2.In the opinion of the physician with knowledge of the claimant’s medical condition, would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.
Whether a delay in a claim determination could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function, may generally be determined by any individual acting on behalf of the plan applying the judgment of a prudent layperson with an average knowledge of health and medicine. However, if a physician with knowledge of the claimant’s medical condition determines that the claim involves urgent care, the plan administrator must treat the claim accordingly.
(b) Pre-service Claims
A plan administrator must also notify a participant of any benefit determination regarding a pre-service claim (whether adverse or not). The term “pre-service claim” means any claim for a benefit under a group health plan, with respect to which the terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit in advance of obtaining medical care.
1. Adverse Benefit Determinations
Any time there is an adverse benefit determination, a participant must be given notice of the claim denial in accordance with DOL regulations. For this purpose, the term “adverse benefit determination” means a denial, reduction or termination, or a failure to provide or make payment (in whole or in part) for, a benefit. Examples of adverse benefit determinations include:
a. Denial of a participant’s eligibility for a benefit;
b. Failure to pay any part of a claim for medical benefits as a result of the application of a plan’s utilization review procedures;
c. Failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary.
2. Benefit Determinations With Respect To Urgent Care and Pre-Service Claims
Some claims are deemed to be so sensitive that a plan administrator is required to provide notice of a benefit determination even if it is not adverse. This is true of urgent care and pre-service claims.
(a) Urgent Care Claims
A plan administrator must notify a participant of any benefit determination regarding an urgent care claim (whether adverse or not). A claim involving urgent care is any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations –
1. Could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function; or
2.In the opinion of the physician with knowledge of the claimant’s medical condition, would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.
Whether a delay in a claim determination could seriously jeopardize the life or health of the claimant, or the ability of the claimant to regain maximum function, may generally be determined by any individual acting on behalf of the plan applying the judgment of a prudent layperson with an average knowledge of health and medicine. However, if a physician with knowledge of the claimant’s medical condition determines that the claim involves urgent care, the plan administrator must treat the claim accordingly.
(b) Pre-service Claims
A plan administrator must also notify a participant of any benefit determination regarding a pre-service claim (whether adverse or not). The term “pre-service claim” means any claim for a benefit under a group health plan, with respect to which the terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit in advance of obtaining medical care.
Content of Notification of Benefit Determination
The DOL regulations specify that a notification of benefit determination governed by ERISA Section 503 must include certain content. This content must be written in a manner calculated to be understood by the claimant. Certain content requirements apply to any notification of benefit determination with respect to any ERISA plan. Other content requirements apply specifically to claims under health and disability plans. The table below summarizes the content requirements applicable to all ERISA plans, as well as those applicable to health and disability plans.
Required Content of Notice of Benefit Determination
Type of Plan Required Content
All ERISA Plans
1. Statement of specific reasons for claim denial.
2. Reference to specific plan provisions.
3. Description of any additional information necessary to complete the claim.
4. Information on how to obtain review, including a specific statement of the claimant’s right to sue following an adverse determination on review.
Group health plans and plans providing disability benefits
1. Any internal rule, guideline, protocol, or other similar criterion that the plan relied on (or alternatively, a statement that such information will be provided on request).
2. If the denial is based on medical necessity or an experimental treatment exclusion or similar exclusion or limit, additional explanation, or a statement that such an additional explanation is available on request.
3. For urgent care cases, a description of the expedited review process that applies.
Required Content of Notice of Benefit Determination
Type of Plan Required Content
All ERISA Plans
1. Statement of specific reasons for claim denial.
2. Reference to specific plan provisions.
3. Description of any additional information necessary to complete the claim.
4. Information on how to obtain review, including a specific statement of the claimant’s right to sue following an adverse determination on review.
Group health plans and plans providing disability benefits
1. Any internal rule, guideline, protocol, or other similar criterion that the plan relied on (or alternatively, a statement that such information will be provided on request).
2. If the denial is based on medical necessity or an experimental treatment exclusion or similar exclusion or limit, additional explanation, or a statement that such an additional explanation is available on request.
3. For urgent care cases, a description of the expedited review process that applies.
When Notification of Benefit Determination Must be Given
DOL regulations provide specific timeframes within which a notice of benefit determination must be provided. How soon a plan administrator must provide a participant or beneficiary with a notification of a benefit determination depends on the nature of the claim. For example, a notification of benefit determination with respect to an urgent care claim must be provided much more quickly than one relating to a non-urgent care claim.
The table below summarizes the time within which a notice of benefit determination must be provided with respect to different types of claims. Each of these mandatory timeframes will be described in greater detail below.
The table below summarizes the time within which a notice of benefit determination must be provided with respect to different types of claims. Each of these mandatory timeframes will be described in greater detail below.
Time within which benefit determination must be provided
Time Within Which Benefit Determination Must Be Provided
Type of Claim Time Limit
1. General rule = 90 days
2. Disability claim = 45 days
3. Post-service health claim = 30 days
4. Pre-service health claim = 15 days
5. Urgent care health claim = 3 days
6. Claim requesting an extension of a course of medical treatment involving urgent care =1 day
1. The General Rule
In general, if a claim is wholly or partially denied, the plan administrator must notify the claimant of the adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the plan. If special circumstances require an extension of time for processing the claim, the plan administrator must notify the claimant of the extension before the termination of the initial 90-day period. The extension cannot be longer than 90 days from the end of the initial 90-day period (i.e., the total period of time, with extensions, cannot exceed 180 days).
2. Special Rules Applicable To Health Plans
Due to the medical exigencies that may apply in connection with a health plan, special rules apply to when a claimant must be notified regarding a benefit determination with respect to these types of claims. Obviously, there are limits as to how long a participant should be required to delay necessary medical treatment while a plan administrator decides a coverage issue. Accordingly, the DOL regulations parse the types of medical claims, and when a corresponding notification of a benefit determination must be provided, more precisely. Below is a discussion regarding the rules applicable to providing notification of a benefit determination in the case of an urgent care, concurrent care, pre-service, and post-service claim.
(a.) Urgent Care Claims
In the case of an urgent care claim (as defined above), the plan administrator must notify the claimant of the plan’s benefit determination as soon as possible, taking into account the medical exigencies, but not later than 72 hours after the receipt of the claim by the plan. If the claimant fails to provide sufficient information to determine whether benefits are covered or payable under the plan, the plan administrator must notify the claimant as soon as possible, but later than 24 hours after receipt of the claim by the plan. The claimant must then be provided a reasonable time, at least 48 hours, to provide whatever information is necessary to complete the claim. Once the claim is completed, the plan administrator must notify the claimant of the plan’s benefit determination as soon as possible, but in no event later than 48 hours after the earlier of –
1. The plan’s receipt of the necessary information; or
2. The end of the period afforded the claimant to provide the necessary information.
(b.) Concurrent Care Decisions
Where a plan administrator has approved an ongoing course of medical treatment, but the treatment plan must be modified, special benefit determination rules apply. One set of rules applies where the plan administrator wishes to curtail or terminate a course of treatment. Another set of rules applies where the participant wants to extend a course of treatment.
If a course of treatment will be reduced or terminated, this constitutes an adverse benefit determination. The participant must be notified of the adverse benefit determination sufficiently in advance of any reduction or termination of the treatment plan to allow the participant to appeal and obtain a determination on review before the benefit is reduced or terminated.
If a participant asks to extend a course of treatment beyond that previously approved by the plan, and the request involves urgent care (as defined above), the claim must be made to the plan at least 24 hours before the completion of the approved treatment plan. The plan administrator must then make a benefit determination as soon as possible, taking into account the medical exigencies. However, the plan administrator must notify the claimant of the benefit determination, whether adverse or not, within 24 hours after receipt of the claim by the plan.
(c.) Pre-Service Claims
In the case of a pre-service claim (as defined above), the plan administrator must notify the claimant of the plan’s benefit determination (whether adverse or not) within a reasonable period of time appropriate to the medical circumstances. In no event may such determination be provided later than 15 days after receipt of the claim by the plan. If necessary, this period may be extended for up to 15 days, provided the claimant is notified of the need for the extension prior to the expiration of the initial 15-day period. If the extension is necessary because the claimant failed to provide required information, the claimant must be given at least 45 days to provide the information.
(d) Post-service Claims
Any claim under a health plan that is not a pre-service claim (as defined above) is deemed to be a “post-service claim.” In the case of a post-service claim, the claimant must be notified of an adverse benefit determination within a reasonable period of time, but not later than 30 days after the plan administrator’s receipt of the claim. This period may be extended for up to 15 days, provided the claimant is given notice of the extension prior to the expiration of the initial 30-day period. If additional information is needed from the claimant to complete the claim, the claimant must be allowed at least 45 days to submit the information.
Type of Claim Time Limit
1. General rule = 90 days
2. Disability claim = 45 days
3. Post-service health claim = 30 days
4. Pre-service health claim = 15 days
5. Urgent care health claim = 3 days
6. Claim requesting an extension of a course of medical treatment involving urgent care =1 day
1. The General Rule
In general, if a claim is wholly or partially denied, the plan administrator must notify the claimant of the adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the plan. If special circumstances require an extension of time for processing the claim, the plan administrator must notify the claimant of the extension before the termination of the initial 90-day period. The extension cannot be longer than 90 days from the end of the initial 90-day period (i.e., the total period of time, with extensions, cannot exceed 180 days).
2. Special Rules Applicable To Health Plans
Due to the medical exigencies that may apply in connection with a health plan, special rules apply to when a claimant must be notified regarding a benefit determination with respect to these types of claims. Obviously, there are limits as to how long a participant should be required to delay necessary medical treatment while a plan administrator decides a coverage issue. Accordingly, the DOL regulations parse the types of medical claims, and when a corresponding notification of a benefit determination must be provided, more precisely. Below is a discussion regarding the rules applicable to providing notification of a benefit determination in the case of an urgent care, concurrent care, pre-service, and post-service claim.
(a.) Urgent Care Claims
In the case of an urgent care claim (as defined above), the plan administrator must notify the claimant of the plan’s benefit determination as soon as possible, taking into account the medical exigencies, but not later than 72 hours after the receipt of the claim by the plan. If the claimant fails to provide sufficient information to determine whether benefits are covered or payable under the plan, the plan administrator must notify the claimant as soon as possible, but later than 24 hours after receipt of the claim by the plan. The claimant must then be provided a reasonable time, at least 48 hours, to provide whatever information is necessary to complete the claim. Once the claim is completed, the plan administrator must notify the claimant of the plan’s benefit determination as soon as possible, but in no event later than 48 hours after the earlier of –
1. The plan’s receipt of the necessary information; or
2. The end of the period afforded the claimant to provide the necessary information.
(b.) Concurrent Care Decisions
Where a plan administrator has approved an ongoing course of medical treatment, but the treatment plan must be modified, special benefit determination rules apply. One set of rules applies where the plan administrator wishes to curtail or terminate a course of treatment. Another set of rules applies where the participant wants to extend a course of treatment.
If a course of treatment will be reduced or terminated, this constitutes an adverse benefit determination. The participant must be notified of the adverse benefit determination sufficiently in advance of any reduction or termination of the treatment plan to allow the participant to appeal and obtain a determination on review before the benefit is reduced or terminated.
If a participant asks to extend a course of treatment beyond that previously approved by the plan, and the request involves urgent care (as defined above), the claim must be made to the plan at least 24 hours before the completion of the approved treatment plan. The plan administrator must then make a benefit determination as soon as possible, taking into account the medical exigencies. However, the plan administrator must notify the claimant of the benefit determination, whether adverse or not, within 24 hours after receipt of the claim by the plan.
(c.) Pre-Service Claims
In the case of a pre-service claim (as defined above), the plan administrator must notify the claimant of the plan’s benefit determination (whether adverse or not) within a reasonable period of time appropriate to the medical circumstances. In no event may such determination be provided later than 15 days after receipt of the claim by the plan. If necessary, this period may be extended for up to 15 days, provided the claimant is notified of the need for the extension prior to the expiration of the initial 15-day period. If the extension is necessary because the claimant failed to provide required information, the claimant must be given at least 45 days to provide the information.
(d) Post-service Claims
Any claim under a health plan that is not a pre-service claim (as defined above) is deemed to be a “post-service claim.” In the case of a post-service claim, the claimant must be notified of an adverse benefit determination within a reasonable period of time, but not later than 30 days after the plan administrator’s receipt of the claim. This period may be extended for up to 15 days, provided the claimant is given notice of the extension prior to the expiration of the initial 30-day period. If additional information is needed from the claimant to complete the claim, the claimant must be allowed at least 45 days to submit the information.
Special Rules Applicable to Disability Benefits
Notice of an adverse benefit determination with respect to a claim for disability benefits must be given within a reasonable period of time, but not later than 45 days after receipt of the claim. An extension of up to 30 days is permitted, but only if the claimant is notified of the need for the extension prior to the expiration of the initial 45-day period. A second 30-day extension is allowed, if the claimant is notified prior to the expiration of the first 30-day extension. If any additional information is necessary to perfect the claim, the claimant must be given at least 45 days to provide the information.
Appeal of Adverse Benefit Determinations
Every employee benefit plan must establish and maintain a procedure by which a claimant may appeal an adverse benefit determination to an appropriate named fiduciary of the plan. The appeal procedure must afford the claimant a full and fair review of the claim and the adverse benefit determination.
Standards for Establishing and Maintaining Full and Fair Review
Standards for Establishing and Maintaining a Full and Fair Review
Type of Plan Applicable Full and Fair Review Standard
All ERISA Plans
1. Except for group health plans and plans providing for disability benefits (see below), claimants must have at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination.
2. The claimant must have an opportunity to submit comments, records, and other information.
3. The claimant must be given access to documents, records, and other information relevant to the claim.
4. The information submitted by the claimant must be taken into account, regardless of whether it was submitted or considered at the time of the initial benefit determination.
Group health plans and plans that provide disability benefits
1. At least 180 days must be allowed for filing an appeal.
2. Full and fair review must not accord deference to the initial determination.
3. The appropriate named fiduciary who reviews the claim must not be a party who made the initial decision, or be a subordinate of that party.
4. The review of any determination based on a medical judgment (including determinations of whether a treatment or drug is experimental, investigational, medically necessary, or appropriate) must be conducted in consultation with an independent health care professional who has appropriate experience in the field of medicine involved in the medical judgment.
5. Provision must be made for identifying any medical or vocational experts whose advice the plan obtained in making the benefit determination.
Type of Plan Applicable Full and Fair Review Standard
All ERISA Plans
1. Except for group health plans and plans providing for disability benefits (see below), claimants must have at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination.
2. The claimant must have an opportunity to submit comments, records, and other information.
3. The claimant must be given access to documents, records, and other information relevant to the claim.
4. The information submitted by the claimant must be taken into account, regardless of whether it was submitted or considered at the time of the initial benefit determination.
Group health plans and plans that provide disability benefits
1. At least 180 days must be allowed for filing an appeal.
2. Full and fair review must not accord deference to the initial determination.
3. The appropriate named fiduciary who reviews the claim must not be a party who made the initial decision, or be a subordinate of that party.
4. The review of any determination based on a medical judgment (including determinations of whether a treatment or drug is experimental, investigational, medically necessary, or appropriate) must be conducted in consultation with an independent health care professional who has appropriate experience in the field of medicine involved in the medical judgment.
5. Provision must be made for identifying any medical or vocational experts whose advice the plan obtained in making the benefit determination.
Standard for Full and Fair Review for Urgent Care
In the case of a claim involving urgent care, the plan must provide an expedited review process, pursuant to which –
1. A request for an expedited appeal of an adverse benefit determination may be submitted orally or in writing by the claimant; and
2. All necessary information, including the plan’s benefit determination on review, must be transmitted between the plan and the claimant by telephone, facsimile, or other available similarly expeditious method.
1. A request for an expedited appeal of an adverse benefit determination may be submitted orally or in writing by the claimant; and
2. All necessary information, including the plan’s benefit determination on review, must be transmitted between the plan and the claimant by telephone, facsimile, or other available similarly expeditious method.
Content Requirements for Notification of Decision on Review
Once a decision on review has been reached, it must be adequately communicated to the claimant. The DOL regulations set forth specific requirements in this regard. Some of these requirements apply to all ERISA plans, while others apply only to health plans, and plans providing disability benefits. The table below summarizes the content requirements applicable to benefit determinations on review for all ERISA plans, as well as group health plans and plans providing disability benefits.
Content Requirements Applicable to Notification of Decisions On Review
Content Requirements Applicable To Notification of Decision On Review
Type of Plan Content Requirements
All ERISA Plans
1.The specific reasons for the adverse benefit determination.
2.Reference to the specific plan provisions on which the benefit determination is based,
3.Statement that the claimant may receive, upon request and free of charge, documents, records, and other information relevant to the claim.
4.Statement describing any voluntary appeals procedures, and a statement of the claimant’s right to bring an action in court under ERISA Section 502(a).
Group Health Plans and Plans Providing Disability Benefits
1.State any internal rule, guideline, protocol, or other similar criterion that was relied on (or, alternatively, a statement that such information will be provided on request).
2.If the determination is based on medical necessity, experimental treatment, or a similar exclusion or limit, additional explanation is required (or a statement that such additional explanation will be provided on request).
3.The following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”
Type of Plan Content Requirements
All ERISA Plans
1.The specific reasons for the adverse benefit determination.
2.Reference to the specific plan provisions on which the benefit determination is based,
3.Statement that the claimant may receive, upon request and free of charge, documents, records, and other information relevant to the claim.
4.Statement describing any voluntary appeals procedures, and a statement of the claimant’s right to bring an action in court under ERISA Section 502(a).
Group Health Plans and Plans Providing Disability Benefits
1.State any internal rule, guideline, protocol, or other similar criterion that was relied on (or, alternatively, a statement that such information will be provided on request).
2.If the determination is based on medical necessity, experimental treatment, or a similar exclusion or limit, additional explanation is required (or a statement that such additional explanation will be provided on request).
3.The following statement: “You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency.”
Timing of Notification of Benefit Determination on Review
There are specific timeframes within which a plan administrator must notify a claimant of its benefit determination on review. These time limits are similar to, but not exactly the same as, those that applied to providing notification of the initial benefit determination. The table below generally outlines the timeliness requirements applicable to notification of a benefit determination on review. Each of the time limits applicable to each type of claim is also discussed in more detail below.
Time Limits Applicable To Notification of Benefit Determination on Review
Time Limits Applicable To Notification of Benefit Determination on Review
Type of Claim Time Limit
General Rule = 60 Days
Post-service Claims = 60 Days (if 2 levels, 30 days each)
Pre-service Claims = 30 Days (if 2 levels, 15 days each)
Urgent Care Claim = 3 Days
Disability Benefits = 45 Days
Type of Claim Time Limit
General Rule = 60 Days
Post-service Claims = 60 Days (if 2 levels, 30 days each)
Pre-service Claims = 30 Days (if 2 levels, 15 days each)
Urgent Care Claim = 3 Days
Disability Benefits = 45 Days
General Rule, Group Health Plans, and Disability Claims
1. General Rule
In the case of a single employer plan, the plan administrator must notify the claimant of a benefit determination on review within a reasonable period of time, but not later than 60 days after receipt of the request for review. If an extension is required, the plan administrator must notify the claimant prior to the expiration of the initial 60-day period. The extension may not be longer than 60 days from the end of the initial 60-day period.
The normal rule described in the preceding paragraph is inapplicable to a multiemployer or other plan that has a committee or board of trustees designated as the appropriate named fiduciary. If the committee or board of trustees meets at least quarterly, the benefit determination must be made no later than the date of the meeting of the committee or board that immediately follows the plan’s receipt of the request for review. However, if the request for review is received within 30 days preceding the date of that meeting, the benefit determination may be made by the date of the second meeting following receipt of the request for review. This review period may be extended, but not later than the third meeting following the plan’s receipt of the request for review, provided proper notice is sent to the claimant prior to the commencement of the extension. The plan administrator must notify the claimant of the benefit determination on review no later than 5 days after the benefit determination is made.
2. Group Health Plans
As with the initial benefit determination, the timing of the notification of a benefit determination on review as regards a group health plan will depend on the nature of the claim. Different time periods apply to urgent care claims, pre-service claims, and post service claims, as described below.
(a.) Urgent Care Claims
The notification of a benefit determination on review with respect to an urgent care claim must be given as soon as possible, but no later than 72 hours after receipt of the claimant’s request for review. No extensions are generally permitted.
(b.) Pre-service Claims
In the case of a group health plan that provides for one appeal of an adverse benefit determination, the notification of the benefit determination on review with respect to a pre-service claim must be provided no later than 30 days after receipt of the request for review. If two appeals are permitted, the notification of benefit determination with respect to any one of the two appeals must be given within 15 days of receipt of the request for review.
(c.) Post-service Claims
In the case of a post-service claim, if the plan provides for a single appeal of an adverse benefit determination, the notification of the benefit determination on review must be provided no later than 60 days after the date of the plan’s receipt of the request for review. If two appeals are permitted, the notification of the benefit determination on review must be given no later than 30 days after the receipt of the request for review.
Post-service claims under a multiemployer or other plan governed by a committee or board of trustees are not subject to the rules described in the preceding paragraph. Rather, if the committee or board of trustees meets at least quarterly, the benefit determination on review must be made at the meeting that immediately follows the plan’s receipt of the request for review. However, if the request for review is filed within the 30 days preceding the date of that meeting, the benefit determination may be made at the second meeting following the plan’s receipt of the request for review. These time limits may be extended, but not beyond the third meeting following the plan’s receipt of the request for review. The claimant must be notified of the benefit determination on review no later than 5 days after the benefit determination is made.
3. Disability Claims
Notification of a benefit determination on review with respect to a disability claim must be provided within 45 days (regardless of whether the plan allows for one or two appeals). In the case of a multiemployer or other plan governed by a committee or board of trustees, however, rules similar to those described above with respect to post-service claims under a multiemployer group health plan apply.
In the case of a single employer plan, the plan administrator must notify the claimant of a benefit determination on review within a reasonable period of time, but not later than 60 days after receipt of the request for review. If an extension is required, the plan administrator must notify the claimant prior to the expiration of the initial 60-day period. The extension may not be longer than 60 days from the end of the initial 60-day period.
The normal rule described in the preceding paragraph is inapplicable to a multiemployer or other plan that has a committee or board of trustees designated as the appropriate named fiduciary. If the committee or board of trustees meets at least quarterly, the benefit determination must be made no later than the date of the meeting of the committee or board that immediately follows the plan’s receipt of the request for review. However, if the request for review is received within 30 days preceding the date of that meeting, the benefit determination may be made by the date of the second meeting following receipt of the request for review. This review period may be extended, but not later than the third meeting following the plan’s receipt of the request for review, provided proper notice is sent to the claimant prior to the commencement of the extension. The plan administrator must notify the claimant of the benefit determination on review no later than 5 days after the benefit determination is made.
2. Group Health Plans
As with the initial benefit determination, the timing of the notification of a benefit determination on review as regards a group health plan will depend on the nature of the claim. Different time periods apply to urgent care claims, pre-service claims, and post service claims, as described below.
(a.) Urgent Care Claims
The notification of a benefit determination on review with respect to an urgent care claim must be given as soon as possible, but no later than 72 hours after receipt of the claimant’s request for review. No extensions are generally permitted.
(b.) Pre-service Claims
In the case of a group health plan that provides for one appeal of an adverse benefit determination, the notification of the benefit determination on review with respect to a pre-service claim must be provided no later than 30 days after receipt of the request for review. If two appeals are permitted, the notification of benefit determination with respect to any one of the two appeals must be given within 15 days of receipt of the request for review.
(c.) Post-service Claims
In the case of a post-service claim, if the plan provides for a single appeal of an adverse benefit determination, the notification of the benefit determination on review must be provided no later than 60 days after the date of the plan’s receipt of the request for review. If two appeals are permitted, the notification of the benefit determination on review must be given no later than 30 days after the receipt of the request for review.
Post-service claims under a multiemployer or other plan governed by a committee or board of trustees are not subject to the rules described in the preceding paragraph. Rather, if the committee or board of trustees meets at least quarterly, the benefit determination on review must be made at the meeting that immediately follows the plan’s receipt of the request for review. However, if the request for review is filed within the 30 days preceding the date of that meeting, the benefit determination may be made at the second meeting following the plan’s receipt of the request for review. These time limits may be extended, but not beyond the third meeting following the plan’s receipt of the request for review. The claimant must be notified of the benefit determination on review no later than 5 days after the benefit determination is made.
3. Disability Claims
Notification of a benefit determination on review with respect to a disability claim must be provided within 45 days (regardless of whether the plan allows for one or two appeals). In the case of a multiemployer or other plan governed by a committee or board of trustees, however, rules similar to those described above with respect to post-service claims under a multiemployer group health plan apply.
Deferential Review by Courts
For historical reasons, courts have generally reviewed an ERISA plan’s benefit determination resulting from a full and fair administrative review deferentially. That is, a plan’s benefit determination in such circumstances would only be overturned by the court if the plan’s decision was arbitrary and capricious.
The Supreme Court, in Firestone Tire & Rubber v. Bruch,489 U.S. 101, 111 (1989), held that a court’s review of a claim for benefits must be under a de novo standard, unless the benefit plan gives the appropriate fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. If the benefit plan grants such authority to the fiduciary, the Court concluded the fiduciary’s decision must be reviewed for abuse of discretion.
"Although it is an overstatement to say that a decision is not arbitrary and capricious whenever a court can review the reasons for its decision without a loud guffaw, it is not much of an overstatement. The arbitrary and capricious standard is the least demanding form of judicial review of administrative action.
Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir. 1985).
Subsequent courts have found that certain plan provisions adequately grant discretion to a fiduciary to warrant an abuse of discretion standard of review. Other courts have found the plan language inadequate, and apply a de novo standard of review. The Seventh Circuit, in an effort to provide more clarity, offered the following “safe harbor” plan language for plan administrators wishing to invoke the abuse of discretion standard of review:
“Benefits under this plan will be paid only if the plan administrator decides in his discretion that the applicant is entitled to them.”
The Supreme Court, in Firestone Tire & Rubber v. Bruch,489 U.S. 101, 111 (1989), held that a court’s review of a claim for benefits must be under a de novo standard, unless the benefit plan gives the appropriate fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. If the benefit plan grants such authority to the fiduciary, the Court concluded the fiduciary’s decision must be reviewed for abuse of discretion.
"Although it is an overstatement to say that a decision is not arbitrary and capricious whenever a court can review the reasons for its decision without a loud guffaw, it is not much of an overstatement. The arbitrary and capricious standard is the least demanding form of judicial review of administrative action.
Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir. 1985).
Subsequent courts have found that certain plan provisions adequately grant discretion to a fiduciary to warrant an abuse of discretion standard of review. Other courts have found the plan language inadequate, and apply a de novo standard of review. The Seventh Circuit, in an effort to provide more clarity, offered the following “safe harbor” plan language for plan administrators wishing to invoke the abuse of discretion standard of review:
“Benefits under this plan will be paid only if the plan administrator decides in his discretion that the applicant is entitled to them.”
Remedies for Procedural Violatios of Administrative Claims Review Procedures
There are no clearly prescribed remedies for a plan's violation of ERISA 503's procedural requirements or the applicable DOL regulations. Some courts have remanded a matter to the plan administrator to reconsider the claim. Others have applied a less deferential standard of review in like circumstances.
Exhaustion of Claims Review Procedures
A participant or beneficiary may nor bring a claim for benefits under ERISA 502(a)(1)(B) in state or federal court without first exhausting the ERISA plan's administrative claims procedures. The exhaustion requirements is not statutory, but federal judge made law, based on ERISA's legislative history and federal labor law.
Some courts have found exceptions to the exhaustion doctrine on equitable grounds, such as futility, a claimant's lack of meaningful access to a full and fair review,or where requiring the claimant to exhaust would cause irreparable harm.
The DOL regulations provide that if a plan fails to establish or follow claims procedures consistent with the requirements of the regulations, a claimant must be deemed to have exhausted the plan's administrative review procedures and must be entitled to pursue any available remedies in court under ERISA 502(a). Accordingly, for example, in Strom v. Siegel Fenche and Peddy Profit Sharing Plan, 497 F.3d 234 (2d Cir. 2007), the court held that a participant did not fail to exhaust the plan's administrative review procedures where the plan administrator failed to provide adequate notice in writing setting forth the specific reasons for the claim denial, written in a manner calculated to be understood by the participant, and otherwise did not afford a full and fair review.
Some courts have found exceptions to the exhaustion doctrine on equitable grounds, such as futility, a claimant's lack of meaningful access to a full and fair review,or where requiring the claimant to exhaust would cause irreparable harm.
The DOL regulations provide that if a plan fails to establish or follow claims procedures consistent with the requirements of the regulations, a claimant must be deemed to have exhausted the plan's administrative review procedures and must be entitled to pursue any available remedies in court under ERISA 502(a). Accordingly, for example, in Strom v. Siegel Fenche and Peddy Profit Sharing Plan, 497 F.3d 234 (2d Cir. 2007), the court held that a participant did not fail to exhaust the plan's administrative review procedures where the plan administrator failed to provide adequate notice in writing setting forth the specific reasons for the claim denial, written in a manner calculated to be understood by the participant, and otherwise did not afford a full and fair review.
Conclusion
Thank you for reviewing Benefits Claims: Administrative Procedures. Hopefully, the blog and its resources are helpful.
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