The Employee Retirement Income Security Act requires that whenever a benefit plan denies a claim such as one involving disability or health insurance, the claimant is entitled to a “full and fair” review of that denial.

But what does the term full and fair review in ERISA (29 U.S.C. Section 1133) actually mean? A recent ruling from a federal court in Connecticut inHughes v. Hartford Life and Accident Insurance Co., 2019 WL 1324947 (D. Conn., March 25, 2019), answered that question.

The case involved Patricia Hughes’ application for disability benefits. When her claim was denied, she challenged Hartford’s decision. During the course of the claim appeal, Hartford had Hughes examined by a doctor of its choosing, but refused the plaintiff’s request that it share the examination results and give her the opportunity to comment prior to Hartford’s ultimate denial of the claim appeal.

The court found that Hartford’s refusal to share the examination findings and allow Hughes to submit a rebuttal denied her a full and fair review.

Prior to the promulgation in 2018 of a regulation by the U.S. Department of Labor that requires plan administrators and insurers to share any evidence developed during a claim appeal and give the claimant an opportunity to challenge that evidence (29 C.F.R. Section 2560.503-1(h)(4)(i)), the courts were split as to whether claimants had such rights.

Some courts maintained that allowing claimants to have the last word in the claim appeal process could lead to a never-ending spiral of evidentiary challenges. Other courts held that without the right to review and comment, claimants could be forever barred from mounting a challenge to adverse evidence since most courts treat ERISA litigation in the same manner as administrative review proceedings and do not permit depositions or the introduction of any new evidence.

The court began its discussion by asking: “Just what does it mean to have a full and fair review? As multiple courts have explained, the ‘persistent core requirements’ of full and fair review include ‘knowing what evidence the decision-maker relied upon, having an opportunity to address the accuracy and reliability of that evidence and having the decision-maker consider the evidence presented by both parties prior to reaching and rendering his decision.’ Halpin v. W.W. Grainger Inc., 962 F.2d 685, 689 (7th Cir. 1992) (quoting Grossmuller v. International Union, United Automobile, Aerospace and Agricultural Implement Workers, 715 F.2d 853, 858 n.5 (3d Cir. 1983)); see also Shakhnes v. Berlin, 689 F.3d 244, 256 n.8 (2d Cir. 2012) (same).”

The court then examined the pre-2018 regulations, which enumerated three rights granted to claimants that were essential to a full and fair review: “[T]he right of the claimant to submit new information, the right of the claimant to have access to relevant information in the possession of the plan and the right of the claimant to have the plan actually take account of information that the claimant submits.”

The court deemed those rights “essential components of what the regulation defines to be a full and fair review” and the justification for a requirement that the plan allow the benefit claimant the right to see and comment upon the examiner’s report prior to deciding the appeal.

The court summarily rejected Hartford’s argument that the claimant’s opportunity to review and comment on evidence applied only to the evidence related to the initial denial.

“If Hughes had no right to learn about secret medical reports that Hartford Life procured and relied on to reject her claim (here, the report and conclusions of a doctor for whom Hartford Life required Hughes to submit to an in-person examination), then her rights during the appeal phase to submit new information and to have this information taken into account by Hartford Life became mostly meaningless,” the court pointed out.

“As the Supreme Court long ago explained, ‘[t]he right to a hearing embraces not only the right to present evidence, but also a reasonable opportunity to know the claims of the opposing party and to meet them[,]’ and ‘[t]he right to submit argument implies that opportunity; otherwise the right may be but a barren one.’ Morgan v. United States, 304 U.S. 1, 18, 58 S. Ct. 773, 776 (1938).”

The court added: “No common sense notion of what it means to have a full and fair review can be squared with a review process that denies a claimant access to key information that will be the very basis for a health or disability plan to deny benefits. Full and fair review suggests a review that is thorough, comprehensive and transparent – not one in which a plan may order up a doctor’s report at the final hour and then deny the claimant access to this information until it is too late for the claimant to respond.”

The court addressed the rulings that supported Hartford’s position and found them both unpersuasive and based on a misreading of the regulations, which led the court to conclude: “I do not see how sandbagging claimants with last-minute medical reports that they cannot respond to does anything to inspire enrollee confidence or to serve the Department of Labor’s stated regulatory purpose to ensure a full and fair review.”

The court also cited the Department of Labor’s position on this issue expressed consistently in amicus briefs and in the Federal Register’s announcement of proposed changes to the regulations in 2016 which led to the adoption of the regulation cited above. Thus, the court concluded that Hartford’s actions violated Hughes’ right to a full and fair review and remanded the case to Hartford for reconsideration.

Although the issue discussed in this opinion will soon fade away since the new regulation effective in 2018 would preclude Hartford’s stonewalling in future cases, the principles of due process and what constitutes “full and fair” review enumerated by the court bear keeping in mind.

According to the preamble to ERISA, the statute was enacted for the protection of plan participants and this ruling reinforced Congress’ intent.

This article was initially published in the Chicago Daily Law Bulletin. 

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This article was initially published in the Chicago Daily Law Bulletin. 

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