Over the next few weeks, we will be discussing the five ways that the new claim procedure regulations will impact your long-term disability claim. For claims filed after April 1, 2018, some changes have been made that could be helpful to claimants and will hopefully make the claim process fairer.
Change #1: Courts Can Use de novo Review
The new regulations permit the court to use the de novo review in cases where an insurer failed to strictly adhere to the regulations. This Latin term, de novo, means to decide anew. Therefore, a de novo decision is where the court decides for itself if the claimant is disabled or not. That means that if the claimant has more evidence that supports disability than the insurer has against it, it is an easier case to win for the claimant. It is better than the court reviewing the insurer's decision and only reversing that decision if it was arbitrary and capricious.
The 11th Circuit Court of Appeals (which governs the federal district courts of Alabama, Florida, and Georgia) acknowledged long ago, when interpreting the old claim procedure regulation, that claims were “deemed denied” when there were significant violations of the claim process requirements. This meant that the insurer's lack of a decision (or decision after a violation) was not considered, since the claim was deemed denied by the violation of the regulation. Thus, the court could decide the claim “anew” or de novo.
Then, the regulation changed to using “deemed exhausted” language, instead of “deemed denied.” This meant you could file suit and did not have to wait for a decision. Several lower courts acknowledged that the claim was deemed exhausted when there were violations of the minimum requirements of the full and fair review. However, some courts permitted the violations nonetheless, contending that the insurer “substantially complied” with the claim procedure regulation. Sort of like horseshoes — somewhat close is close enough. That created a lot of uncertainty and, frankly, unfairness for claimants. You never knew if the unfairness was enough to go forward with a lawsuit. If you were wrong, your case was dismissed.
Now, the insurer must strictly adhere to the regulations and, if it does not, the insured is permitted to move forward with filing a lawsuit. If that occurs and the court finds the violation more than trivial, a de novo review may result.
These changes underscore the necessity of having an ERISA attorney review your claim during the claim process and before you are finished with the claim process. Once you believe there is a violation or there is some unfairness in the claim process, you should promptly consult with an ERISA attorney. Of course, if your claim is denied, it is critical to obtain an ERISA attorney at that point before the time for an appeal is over. Do not fall for the false belief that if enough information is shared with the insurance company, the claim will be paid. If you wait too long, it may be too late for the attorney to help your claim. Rarely does that happen. If you wait too long, it may be too late for the attorney to help you on your claim.