If your long term disability (LTD) claim is denied, you will have 180 days (just under 6 months) to file an administrative appeal. Moreover, if your disability plan is governed by the Employment Retirement Income Security Act of 1974, (ERISA) your denial notification letter most likely will state that information. Regardless, it is of paramount importance that you follow the appeal procedure to the letter. Failure to submit your appeal during the required timeframe results in a forfeiture of your right to contest the denial.
The Exhaustion of Remedies doctrine is the legal principle behind the requirement that claimants must file administrative appeals before they are allowed to proceed on to court. Its purpose is to prohibit parties from disputing matters in court prior to presenting their arguments to lower administrative levels.
Recently, the 5th Circuit Court of Appeals ruled on an ERISA LTD case that dealt with this doctrine. In Moss v. Unum, the Court of Appeals considered the question of whether a phone call from a claimant’s lawyer to a disability insurance company (Unum) sufficiently constituted an exhaustion of administrative remedies. According to the court’s decision, the attorney called Unum and verbally informed them of his disagreement with their decision to deny LTD benefits to his client. At issue however was the fact that he failed to submit a formal written appeal. Instead of going the administrative appeal route, he quickly filed a lawsuit in court. Ultimately, the 5th Circuit ruled that the lawyer’s phone call to Unum did not constitute an administrative appeal. The court further explained that “[A]llowing informal attempts to substitute for the formal claims procedure would frustrate the primary purpose of the exhaustion requirement.”
Moss v. Unum highlights the damaging consequences that await those claimants who do not submit written, formal appeal letters in ERISA LTD cases. And while it is possible that other Circuit Courts may be more lenient toward claimants who fail to file administrative appeals, no one should ever take the risk of skipping the filing of an administrative appeal.
The Moss plaintiff also contended that the administrative appeal was not required because the denial letter in his case stated: “Unless there are special circumstances, the administrative appeal process must be completed before you begin legal action…” Moss made the argument that the bad faith demonstrated by Unum during the claim process constituted “special circumstances”. However the court rejected this argument, reasoning that Moss’s position would open the floodgates and allow countless claimants to sidestep the administrative appeal filing requirement simply by claiming “bad faith”.