I am of two minds when it comes to ERISA decisions out of the Second Circuit. My first is to naturally jump to the conclusion that, in the immortal words of Willy Loman, attention must be paid, simply because of the Court. Then I remember the long retired big law partner from my long ago days as a summer associate who would only allow me to cite to Second Circuit decisions, which he believed carried more heft than those of other courts, and I decide I don’t want to give decisions out of any particular circuit pride of place.
So what I do is balance those two responses, and allow them to cancel each other out; this ends up with ERISA decisions out of the Second Circuit being treated by me the same as those out of any other circuit, to be analyzed on their own merits and discussed only if their substance warrants. This case from last week out of the Second Circuit passes that bar, although possibly by not that much. McQuillin v Hartford Life holds that a disability insurer should be held to the strict letter of the Department of Labor’s claim handling regulations, and deemed to have forfeited its right to insist on completion of its own internal review prior to being sued if it failed to fully complete its review and issue a final decision within the time period set by the regulations. The insurer had instead issued, in effect, an interim decision within the necessary time period, and claimed for itself the right to proceed with further internal evaluation of the claim before the insured participant could sue for benefits. The Court held that the regulations allowed the insured to bring suit without waiting for the insurer to conclude that additional review.
The Court explained:
Under ERISA, a claimant may sue in federal court for benefits due to him under his disability plan. But first a claimant must exhaust his plan’s internal remedies. A plan’s remedies are deemed exhausted if the plan administrator does not “strictly adhere” to § 503-1’s requirements. McQuillin asserts that, because Hartford did not provide a “benefit determination on review” within the 45-day window required by § 503-1(i)(3)(i), his administrative remedies should be deemed exhausted. Although Hartford’s April 23 letter “overturned” the original decision and “forwarded” his claim to the claims department for further consideration, McQuillin maintains that the letter failed to render a “benefit determination.” Thus, because Hartford did not strictly adhere to the rule’s requirements, McQuillin’s remedies were deemed exhausted such that he was free to bring suit in district court. Hartford responds that its April letter was a timely benefit determination on review because such a determination need only resolve the issue appealed, not the entire benefits claim.
The dispositive question in this appeal is whether a valid benefit determination on review must determine whether a claimant is entitled to benefits. Based on the regulation’s plain language, structure, and purpose, we hold that it must. We further hold that, because Hartford did not extend the benefit determination period, McQuillin’s duty to exhaust had ceased by the 46th day, the day he filed his federal case.
It’s not exactly rocket science, to conclude that the Department of Labor regulations in this context mean exactly what they say and should be applied literally, and thus I almost passed on discussing this case despite its court of origin. In a way, though, the case makes me think of that justiciability doctrine of “capable of repetition, yet evading review,” under which issues are worth the court’s attention simply because they may happen many more times over. It seems certain that this type of problem in the handling of disability claims will recur many times over as insurers seek to process numerous claims – there is value to knowing what one leading court has said concerning how the Department of Labor’s claim regulations apply to the situation.