What Does a “Full and Fair Review” Mean Under ERISA?
In 2018, a new Department of Labor (DOL) rule went into effect, clarifying your right to a “full and fair review” under ERISA. While you may not have noticed the change, it dramatically impacted how companies and insurers must handle short-term and long-term disability claims.
In this article, our team of disability insurance lawyers explains your essential rights during a disability insurance appeal and discusses what you should do if violations occur.
ERISA §503: Disability Claimants Must Receive a “Full and Fair Review”
The Employee Retirement Income Security Act of 1974 (ERISA) guarantees all disability claimants a full and fair review from their insurance company. Specifically, §503 of the Act states:
[E]very employee benefit plan shall—
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
(2) 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.”
Between 1974 and 2003, the Department of Labor (DOL) issued a variety of regulations addressing a disabled worker’s right to adequate notice and a full and fair review. But by 2016, the DOL had become increasingly aware that its ERISA rules badly needed an update.
- Related Article: 5 FAQs About Private Disability Insurance Claims
DOL Strengthens Consumer Protections
Beginning in 2016, the Department of Labor (DOL) reviewed its procedures and considered 145 public comments from insurance plans, employers, advocacy groups, disabled workers, and others. This painstaking process resulted in 29 CFR §2560.503-1, a new regulation that clarifies the review process and aims to bring “fairness and accuracy” to the claims review process. This rule became effective April 1, 2018, and it now governs most pending ERISA claims.
The new regulation says insurers must provide the following:
- Detailed disclosures: When denying a claim, the insurance company must provide a thorough discussion of its rationale, including why it disagreed with the Social Security Administration’s disability determination (if applicable).
- A chance to respond to “new evidence”: If the adjuster obtains additional evidence, such as a report from an IME or physician consultant, during the internal appeal process, then the company must give you a fair opportunity to respond to this information.
- Impartiality: The insurance company’s decisionmakers and experts must remain impartial. Under this rule, experts cannot be hired, promoted, fired, or compensated based on their decisions.
- Notices that are linguistically and culturally appropriate: This rule adopts the Affordable Care Act (ACA)’s approach to linguistically appropriate written notices and customer service calls.
RELATED: What Does a Physician Consultant Do in a Disability Insurance Claim?
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What Happens if an Insurer Denies Me a Full and Fair Review?
If the insurance company does not meet the claim procedure requirements described in §2560.503-1, you can file a federal lawsuit, even if the insurance company has not issued its final decision. Filing a lawsuit may speed up your legal claims and limit the insurance company’s defenses.
However, this doesn’t mean your federal lawsuit will be simple. ERISA still presents challenges for people filing long-term or short-term disability claims. For example, you usually won’t be allowed to present additional evidence once you’ve exhausted your administrative remedies.
Before you rush to file an ERISA lawsuit, you should consult an experienced LTD attorney. We can help you understand your legal rights and suggest ways to strengthen your claims at every stage of the appeal process.
Bryant Legal Group: A Practical Approach to ERISA Litigation
Bryant Legal Group is one of Illinois’ premier disability insurance law firms. We prioritize results over industry recognition, and we have recovered millions of dollars in compensation and insurance benefits for our clients.
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