Court Finds Disability Denial Appeal Is Untimely

Augusta Edwards argued that the untimeliness of her appeal should be excused because she was in “substantial compliance” with administrative review procedures under the plan. In its opinion, the 7^th U.S. Circuit Court of Appeals explained that in general the doctrine of substantial compliance means that a plan administrator who has violated a technical rule under the Employee Retirement Income Security Act (ERISA), such as regulations governing the contents of letters denying claims for benefits, may be excused for the violation if the administrator has been substantially compliant with the requirements of ERISA.   

The appellate court said in previous cases it “has recognized that ERISA plans have an interest in ‘finality of decisions’ regarding claims for benefits that militates against reopening a plan’s administrative claim process willy-nilly.” It has also found that failure to file a timely administrative appeal from a denial of benefits “is one means by which a claimant may fail to exhaust her administrative remedies.”   

“[T]he administrator must implement and follow the plain language of the plan, in so much as they are consistent with the statute. This includes a deadline that is consistent with the regulations governing ERISA claims,” the opinion said.  

The court found Edwards has never offered an explanation for the untimeliness of her appeal that would warrant an exercise of discretion by the plan administrator in her favor.  

In addition, the court found Edwards’s reliance on Wisconsin’s “notice-prejudice” statute to be misplaced. It explained that under the statute in question, where a policy of liability insurance requires an insured to give notice of claims to an insurer, “failure to give any notice required by the policy within the time specified does not invalidate a claim made by the insured if the insured shows that it was not reasonably possible to give the notice within the prescribed time and that notice was given as soon as reasonably possible.”   

The court noted that in this case, the plan is not an insured plan, and the benefits at issue are disability benefits, not liability insurance, which is the type of insurance governed by the Wisconsin statute. In addition, the plan points out that state notice-prejudice rules typically apply only to initial denials of benefits. Finally, Edwards never has explained the reason for the untimeliness of her administrative appeal and therefore has not shown either that it was not reasonably possible to give notice within the prescribed time or that notice was given as soon as reasonably possible.  

According to the opinion, Edwards filed a claim for disability benefits after her doctor determined she was totally and permanently disabled.  However, her employer Briggs & Stratton’s own doctor determined she was not, so her claim was denied.  

The letter informing Edwards of the denial of her claim advised her that she had 180 days from receipt of the letter to appeal the denial of benefits to the plan’s Retirement Committee. In addition, a letter to Edwards’s counsel said the appeal letter must be received by the plan by March 31, 2008. The appeal letter was not received by the plan until April 11, 2008.