Yesterday, in Jette v. United of Omaha Life Ins. Co., No. 20-1713, __F.4th__, 2021 WL 5231971 (1st Cir. Nov. 10, 2021), a case involving a long-term disability claim, the Sixth Circuit considered whether the Department of Labor’s regulations governing claims procedures for employee benefit plans, effective January 1, 2002 (“2002 Regulation”), requires ERISA plan administrators to provide new medical opinions generated during the appeals process to a claimant in order to provide that claimant with a “full and fair review” of her claim. Plaintiff-Appellant Karen Jette filed a claim for long-term disability benefits with United of Omaha Life Insurance Company (“United”) in 2013, which United approved. After a couple years, surveillance of Jette’s activities, and a paper medical review, United terminated Jette’s claim. Jette appealed the decision to United and then United sent Jette for an in-person medical evaluation. Though she asked for a copy of the report before United made a final decision so that she could respond to it, United refused to disclose the report to her. United decided to uphold its claims decision and relied, in part, on the new medical report.
At the district court, Jette claimed that United violated the ERISA regulations, specifically 29 C.F.R. § 2560.503–1(h), by failing to allow her to review and rebut the medical report prior to its final decision on her appeal. Subsection (h) of the regulation governs the appeal of adverse benefit determinations. A claimant must be provided, “upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.” Id. § 2560.503-1(h)(2)(iii). A document is considered relevant to a claim if it was “relied upon in making the benefit determination” or was “submitted, considered, or generated in the course of making the benefit determination.” Id. § 2560.503–1(m)(8)(i)-(ii). Subsection (h) also requires that a claimant be provided an “opportunity to submit written comments, documents, records, and other information relating to the claim for benefits.” Id. § 2560.503–1(h)(2)(ii). The administrator’s review of the appeal must “take[ ] into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.” Id. § 2560.503–1(h)(2)(iv). There is no dispute that the 2016 version of the ERISA regulations require disclosure of new evidence on appeal, however, the parties disagreed as to whether the 2002 Regulations require the same disclosure. The district court sided with United, explaining that United only had to disclose the report if it relied on it to find a new reason to deny coverage. The district court also sided with United on the merits of the claim, finding that substantial evidence supported United’s decision to terminate Jette’s LTD claim.
In aligning with the Ninth Circuit’s decision in Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 680 (9th Cir. 2011), the First Circuit read the plain language of subsection (h)(2)(iii) as requiring an administrator to provide a claimant with all documents relevant to her claim for benefits prior to making a final claims decision. The term “claim” refers to the request for benefits under the Plan. The court rejected United’s narrow construction of the term “claim” to only apply to the initial claim for benefits. When an administrator is reviewing an appeal, it is not simply reviewing the initial benefit determination, but engaging in its own benefit determination. Nothing in subsection (h)(2)(iii)’s language supports the district court’s interpretation that documents generated after an appeal must be provided to the claimant prior to a final determination only if the insurer relies on them to find a new reason to deny coverage. The 2002 Regulations required United to disclose the report, give Jette an opportunity to respond to the report, and then take into account her new submissions. Its failure to do so deprived Jette of a full and fair review of her claim. The court found that Jette was prejudiced by United’s procedural violation and declined to review United’s substantive decision. The court remanded the case to the district court with instructions that the case be remanded to United for a full and fair review of Jette’s claim.
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