Employees in Chicago and elsewhere in Illinois with employer sponsored long term disability benefits are often eager to consult a long term disability attorney and bring a lawsuit as soon as the insurer denies the claim for benefits. However, before filing a lawsuit under ERISA § 502(a) to recover disability benefits, employees must first exhaust administrative remedies. A great long term disability lawyer can help you understand where you are in the process and can provide the best odds of getting a claim denial overturned through the administrative appeals process and avoiding litigation, thus saving time and money. A recent case from Kentucky illustrates why exhausting administrative remedies before filing a lawsuit is so important.
In Watkins v. Matrix Absence Mgmt., No. 3:15-CV-00716-JHM, 2015 U.S. Dist. LEXIS 145387 (W.D. Ky. Oct. 27, 2015), Watkins filed a lawsuit against Matrix Absence Management, Inc. (“Matrix”), the claim review unit of Reliance Standard Life Insurance Company (“Reliance”), under ERISA § 502(a) to recover short-term disability and long term disability benefits. Watkins did not submit an administrative appeal of the claim denial. He argued an appeal would have been futile because Reliance Standard denied his claim based on the plan provision requiring an employee to work a certain number of hours before becoming eligible for coverage (a fact that Watkins could not change). This turned out to be a fatal mistake, prompting the court to dismiss his lawsuit.
The Watkins court reasoned that under ERISA, a claimant does not have to exhaust a benefit plan’s administrative remedies before filing a lawsuit when “resorting to the plan’s administrative procedure would simply be futile or the remedy inadequate.” The standard for determining futility is whether a “clear and positive indication of futility can be made.” The claimant has to show that it is certain that his claim will be denied on appeal, not merely that he doubts that an appeal will result in a different decision. The court looked carefully at whether Watkins had made a clear and positive indication of futility so that his claim could proceed in court without an administrative review.
The court stated that the administrative-futility doctrine applies in only two scenarios: (1) when the plaintiff’s lawsuit is directed at the legality of the plan and not merely an interpretation of it, and (2) when the defendant lacks the authority to grant the relief plaintiff seeks. The court held that neither of these to situations was present in Watkins’ case. In the end, the court decided that Watkins had not met his burden of proving that the administrative appeals process would have been futile, and dismissed his lawsuit.
If your claim for long term disability benefits has been denied, and you want to discover how to recover your benefits as quickly as possible, talk to a knowledgeable long term disability attorney immediately.