District Court Excludes Post-Exhaustion Evidence in ERISA Disability Case, Highlighting Importance of Procedural Deadlines

In King v. Reliance Standard Life Insurance Company, No. 1:23-CV-00443-GSL-SLC, 2024 WL 5165572 (N.D. Ind. Dec. 19, 2024), Indiana Northern District Judge Gretchen S. Lund addressed procedural issues under the Employee Retirement Income Security Act (ERISA) underscoring the critical importance of compliance with Department of Labor (DOL) regulations concerning claim review deadlines and the scope of the evidentiary record in ERISA litigation.

Plaintiff, a former Senior Case Specialist at Medtronic, was initially awarded long-term disability benefits under her employer’s plan, administered by Reliance Standard Life Insurance Company. In 2018, Plaintiff developed a neurocognitive disorder affecting her ability to work, leading her to submit a claim for disability benefits which Reliance approved. In 2022, Reliance determined that Plaintiff was no longer eligible for benefits due to her physical disability but approved her for mental disability benefits which were capped at twelve months. Plaintiff appealed the termination of her physical disability benefits, leading to a complex procedural sequence that culminated in this lawsuit.

The crux of the legal dispute centered around whether evidence obtained by Reliance after the administrative claim was deemed exhausted should be included in the court’s record. Plaintiff argued that Reliance’s failure to comply with DOL’s 45-day decision deadline, without seeking a proper extension, meant her claim was exhausted as of September 14, 2023. Consequently, she contended that any evidence gathered by Reliance post-exhaustion should be excluded from the court’s consideration.

The court agreed with Plaintiff, granting her motion to exclude such evidence and emphasizing that Reliance’s noncompliance with the DOL’s strict deadlines effectively closed the administrative record. This finding is pivotal because it limits the evidence the court can review, ensuring that plan administrators adhere to procedural timelines designed to protect claimants’ rights. The court’s decision highlights the “bright line” nature of DOL deadlines, as established in preceding cases like Fessenden v. Reliance Standard Life Ins. Co., 927 F.3d 998, 1000 (7th Cir. 2019).

Under ERISA, the standard of review can significantly influence the outcome of a case. Typically, courts review benefit denials under an arbitrary and capricious standard where the plan grants discretionary authority to the administrator. However, when a plan administrator fails to make a timely final decision, as in this case, the court applies a de novo standard, conducting an independent review without deference to the administrator’s decision. This shift can be advantageous for claimants, as it allows the court to evaluate the claim on its merits rather than relying on the potentially biased determinations made by the plan administrator. By excluding post-exhaustion evidence, the court reinforced the principle that administrators cannot benefit from their own procedural delays or errors, thereby safeguarding the rights of claimants against protracted and potentially prejudiced administrative processes.

If Reliance or your insurer has denied or otherwise limited your disability insurance claim, contact us for assistance.