Employees in Chicago and the Midwest who are participants in plans maintained by associations finally have clarity about the required administrative claims process when seeking long-term disability benefits. Often association boards meet on set schedules, such as monthly or quarterly. The boards may have used these meetings in the past in order to make determinations on claims for benefits from plans established and maintained by the association. But a recent decision from the United States Court of Appeals for the Ninth Circuit may have changed that forever.
In Barboza v. California Association of Professional Firefighters, No. 09-16818, 2011 U.S. App. LEXIS 13341 (9th Cir. June 30, 2011), Barboza was a participant in a long-term disability plan maintained by the California Association of Professional Firefighters. Barboza filed his claim for disability benefits, but the association’s board did not render a decision on the claim until its next scheduled quarterly meeting. In the meantime, Barboza filed a lawsuit in federal court, claiming he did not have to exhaust any administrative claims procedure because the plan did not make a determination on his benefit claim within the time prescribed in the regulations pursuant to 29 C.F.R. § 2560.503-1(l).
Plan administrators generally must make determinations on benefit claims within 60 days. Id. § 2560.503-1(i)(1)(i). Certain plans that have a committee or board of trustees can make general benefit determinations at regularly scheduled quarterly meetings. Id. § 2560.503-1(i)(1)(ii). Disability claims, however, must be resolved within 45 days instead of 60. Id. § 2560.503-1(i)(3)(i). But multiemployer disability plans may still make the determinations at quarterly meetings. Id. § 2560.503-1(i)(3)(ii). This seems straight-forward, but each rule is subject to exceptions, citing other provisions of the regulation. The plan in this case planned to avail itself of the quarterly meeting rule, but Barboza argued that rule is not available to the plan because it is not a multiemployer plan.
The Department of Labor submitted an amicus brief, arguing in favor of Barboza, and construed the regulation to preclude associations, even those with a committee or board of trustees, from making determinations on claims for disability benefits at quarterly meetings. The Court of Appeals agreed, and ruled that Barboza did not have to wait for the plan to make a determination on his claim for benefits, and could proceed to court after the plan failed to render a decision or request an extension within the 45-day period.