December 9, 2019

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Best Practices in Administering Benefit Claims #4 – Know (and Understand) the Law: Full and Fair Review

This week in our blog series on best practices in administering benefit claims, we discuss the importance of knowing and, importantly, understanding the laws governing benefit claim administration.

Section 503 of ERISA sets forth the general guidelines for a plan’s claims and appeal procedures.  It requires that a plan provide adequate written notice of the denial of a claim by a participant or beneficiary (or authorized representative).  The notice has to set forth the specific reasons for the denial and be “written in a manner calculated to be understood by the participant.”  ERISA also requires that a plan provide a participant whose claim has been denied the opportunity for a “full and fair review by the appropriate named fiduciary.”  The U.S. Department of Labor’s implementing regulations elaborate on the ERISA claims procedures requirements in much more detail and, in particular, concern the time, notification, and content requirements for each phase of the claims process.

  • What is the timing for an initial claim decision? The regulations provide specific timing requirements for deciding an initial claim; generally speaking, a decision regarding a claim must be rendered within 90 days of receipt of the claim regardless of whether the claim was complete.  That period can be extended in the case of “special circumstances” provided the claimant is notified of the extension before the expiration of the initial period.  In some cases (g., urgent care, pre-service, and post-service claims under a group health plan), the period may be shorter than 90 days.

  • What information must an adverse claim decision include? If the claims fiduciary determines that the claim should be denied (in whole or in part), that adverse determination has to include the specific reasons for determination, information needed to perfect the claim, references to relevant plan provisions, a statement of the claimant’s right to relevant documents, a description of the plan’s appeal procedures and time limits, and a statement of the claimant’s right to bring suit under ERISA following an adverse benefit determination on appeal.  Additional information may be required when dealing with a group health plan or a plan providing disability benefits.

  • What is the timing for decision on appeal? A claimant should be given at least 60 days (or 180 days for group health plans) to appeal following receipt of an adverse benefit determination notice.  In connection with their appeals, claimants should be given the opportunity to submit comments and other documentation related to the claim, and to request any documents, records, and information relevant to the claim.

  • Who decides the appeal and what information must an adverse appeal decision include? The same person or group may generally decide the claim and appeal other than for group health plans where the decision-maker on the appeal must be different from the decision-maker on the claim.  In all cases, the fiduciary responsible for the decision on appeal may not give deference to the initial claim decision and should take into account everything submitted in connection with appeal to make its own decision.  If there is an adverse benefit determination on appeal, the notice must contain much of the same information as the initial adverse claim decision.

  • Special rules for group health plans. There are a number of special rules for group health plans, including those noted above and, in certain instances, an external review requirement.  These requirements go well-beyond the scope of this blog.

ERISA’s claims regulations weave a complex web of rules for a plan’s claims and appeal procedures.  Care should be taken to (1) review and understand the regulations, and (2) properly document the claims procedures in the plan document and summary plan description.

Next week, we’ll discuss the importance of a good claims process and a participant’s obligation to exhaust the claims procedures before commencing an action for benefits.

You can find our previously published best practices here:

© 2019 Proskauer Rose LLP.

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About this Author

Paul Hamburger Employee Benefits Law Attorney Proskauer Rose Law Firm
Partner

Paul M. Hamburger is co-chair of the Employee Benefits & Executive Compensation Group and head of the Washington, DC office. Paul is also a leader of the Practice Center’s health and welfare subgroup and a member of Proskauer’s Health Care Reform Task Force.

Paul provides technical knowledge and advice to employers on all aspects of their employee benefit programs, and advises employee benefit plan trustees and service providers on ERISA and employee benefit plan-related matters. He has extensive experience in negotiating service provider...

202.416.5850
Russell L Hirschhorn ERISA Litigation, employee benefits attorney, Proskauer
Senior Counsel

Russell Hirschhorn is a Senior Counsel in the Labor & Employment Law Department, where he focuses on complex ERISA litigation and advises employers, fiduciaries and trustees on ERISA benefit and fiduciary issues. 

Russell represents employers, plan sponsors, plans, trustees, directed trustees and fiduciaries in all phases of litigation, arbitration and mediation involving employee benefits, including class action and individual claims relating to ERISA’s fiduciary duty and prohibited transaction provisions, denials of claims for benefits, severance plans, ERISA Section 510, retiree benefits, ERISA preemption of state law claims, plan investment losses, cash balance plan conversions, plan amendments or terminations, withdrawal liability, and employer contributions to multiemployer funds

212.969.3286
Malerie Bulot Labor Employment Attorney
Associate

Malerie L. Bulot is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group. Malerie received her J.D. and diploma in comparative law, magna cum laude, from Louisiana State University Paul M. Hebert Law Center, where she was a senior editor of the Louisiana Law Review and Order of the Coif. While at LSU, she served as a judicial extern to United States District Judge Shelly D. Dick, Middle District of Louisiana.

Education

  • Louisiana State University Paul M. Hebert Law Center , J.D., D.C....
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