District Court Finds Plaintiff Has Right to File Lawsuit for Long Term Disability Benefits Due to ERISA Plan’s Procedural Violations

In Witt v. Intel Corporation Long-Term Disability Plan, No. 3:23-CV-01087-AN, 2024 WL 687928 (D. Or. Feb. 16, 2024), Oregon District Judge Adrienne Nelson denied Intel Corp LTD Plan’s motion to compel exhaustion of administrative remedies and to stay proceedings finding that Plaintiff’s appeal had been “deemed exhausted” due to the Plan’s failure to strictly adhere to procedural deadlines.

Plaintiff was a software development engineer at Intel Corp. when he ceased working due to symptoms from idiopathic hypersomnia. Intel Corp.’s claims administrator, ReedGroup, approved three months of LTD benefits before terminating Plaintiff’s claim. Plaintiff retained counsel and submitted an appeal dated May 25, 2023. On July 12, 2023, ReedGroup wrote that it needed an extension of time to decide the appeal because it was awaiting the results of an independent physician review. Plaintiff’s counsel informed ReedGroup that the extension notice was too late (beyond the 45-day period), and that the need for a physician review was not a “special circumstance” beyond ReedGroup’s control as required for an extension under 29 CFR § 2560.503-1(f)(3). Plaintiff filed the instant lawsuit on July 26, 2023.

In opposition to the motion to compel exhaustion, Plaintiff alleged that his administrative remedies were deemed exhausted because ReedGroup: (1) failed to issue a decision with 45 days of receiving his appeal; (2) failed to request an extension of time within the first 45 days; (3) stated a reason for taking the extension that was not permitted under ERISA regulations; and (4) failed to consult with an appropriate medical specialist.

Under 29 C.F.R. § 2560.503-1(l)(2)(i), a claimant is deemed to have exhausted his administrative remedies if a plan fails to strictly adhere to all ERISA procedural requirements. Here, the Court found that by a simple calendar count, ReedGroup’s July 12, 2023 extension request was not timely. Further, the Court found that ReedGroup’s proffered reason for requesting an extension was not an appropriate “special circumstance.” Citing Salisbury v. Prudential Insurance Company of America, 238 F. Supp. 3d 444, (S.D.N.Y. 2017), the Court looked to the Department of Labor’s preamble, which stated that “the time periods for decision making are generally maximum periods, not automatic entitlements,” that “an extension may be imposed only for reasons beyond the control of the plan,” and “simply having too much work does not constitute an acceptable justification.” The Court further noted that “virtually every appeal of the denial of a disability benefits claim will require ‘physician and vocational review,’ and thus this cannot constitute a valid ‘special circumstance.’” The fact that ReedGroup waited 29 days before requesting the independent physician review, and then claimed the need to provide Plaintiff with time to rebut the review were unpersuasive reasons when ReedGroup’s own actions caused the need for additional time. Thus, the Court found that ReedGroup committed a procedural violation by requesting an extension for reasons that do not constitute special circumstances. The Court further concluded that ReedGroup committed a third procedural violation when it did not issue an appeals determination on July 10, 2023.

With regard to the specialty of the physician retained by ReedGroup to review the claim, the Court found that ReedGroup’s choice of a family practice physician was not inappropriate, particularly given that the physician certifying Plaintiff’s disability was also a family practice physician.

Finally, the Court found that ReedGroup’s procedural violations were not de minimus. While the Court agreed to some extent that a two-day delay in requesting an extension would be a de minimis violation, ReedGroup’s failure to provide any explanation of good cause for the delay, or any basis for finding that the delay was due to matters beyond ReedGroup’s control, rendered the de minimis exception inapplicable for that violation. With regard to ReedGroup’s rationale for the extension request itself, citing Brewer v. Unum Group Corporation 622 F. Supp. 3d 1113 (N.D. Ala. 2022), the Court reasoned that the failure to issue a timely decision goes to the heart of the claims process, and interpreting untimeliness as de minimis “would encourage plan administrators to (1) blow the deadline, (2) wait for the claimant to file suit, (3) issue an untimely decision, and then (4) argue that its untimeliness was de minimis and that, as a result, the claimant had not exhausted her administrative resources when she filed suit.” Id. at 1131. The Court further reasoned that ReedGroup should have known that sending Plaintiff a medical review and needing a response was not unusual. The Court highlighted that ReedGroup solely controlled the timing of sending new information to Plaintiff, so it could not have missed the deadline for reasons beyond its control.

Because ReedGroup committed procedural violations while processing plaintiff’s appeal that do not constitute de minimis violations under 29 C.F.R. § 2560.503-1(l)(2)(ii), the Court held that plaintiff’s administrative remedies were deemed exhausted.

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