Plan and claims administrators processing employee benefit claims under ERISA are subject to statutory and regulatory requirements designed to ensure that claimants receive a full and fair review of their benefit claims. When an employee's benefits are denied, ERISA mandates that specific reasons for the denial of benefits be communicated to the claimant. Militello v. Cent. States, Se. And Sw. Areas Pension Fund, 360 F.3d 681, 688 (7th Cir.), cert. denied, 543 U.S. 869, 125 S.Ct. 106, 160 L.Ed.2d 115 (2004). The relevant section of ERISA provides that every employee benefit plan must afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the plan administrator or the named fiduciary denying the claim. 29 U.S.C. § 1133.
Furthermore, federal regulations promulgated pursuant to ERISA by the Secretary of the Department of Labor set certain minimum requirements for procedures and notification when a plan administrator denies a claim for benefits. The notification must set forth certain information in a manner calculated to be understood by the claimant, including the specific reason for the adverse determination, reference to the specific plan provision on which the determination is based, and a description of the plan's review procedures. In cases of denied medical claims and disability claims, if an internal guideline or protocol was relied upon to deny the claim, it must be provided free of charge to the claimant upon request. Additionally, if the denial of benefits is based on a medical necessity or experimental treatment (or similar exclusion or limit) an explanation of the scientific or clinical judgment must be provided free of charge upon request. 29 C.F.R. § 2560.503-1(g).
With regard to the appeal of adverse benefit determinations, employee benefit plans "shall establish and maintain a procedure by which a claimant shall have a reasonable opportunity to appeal an adverse benefit determination to an appropriate named fiduciary of the plan, and under which there will be a full and fair review of the claim and the adverse benefit determination." 29 C.F.R. § 2560.503-1(h)(1). The claims procedures of a group health plan, for example, will not be deemed to provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination unless the claims procedures:
- Provide claimants with at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination;
- Provide for a review that does not afford deference to the initial adverse benefit determination and that is conducted by someone other than the individual who made the initial adverse benefit determination that is the subject of the appeal;
- Provide that the plan administrator or appropriate named fiduciary deciding an appeal of an adverse benefit determination that is based in whole or part on a medical judgment consult with a health care professional who has the appropriate training and experience in the field of medicine involved in the medical judgment;
- Identify the medical or vocational experts whose advice was obtained on behalf of the plan; and
- Provide that the health care professionals who are consulted by the plan or the plan's fiduciary were not involved in the initial investigation of the claim.
In addition to the federal statutory and regulatory requirements for ERISA health care plans, Indiana has implemented procedural guidelines for the handling or payment of claims for health care services and for the timely resolution of grievances. I.C. 27-8-28. Indiana Code section 27-8-28 provides that an insurer shall prominently display on all notices to covered individuals the toll free telephone number and the address at which a grievance or request for external grievance review may be filed, as well as the department, address, and telephone number through which a covered individual may contact a qualified representative to obtain information about the decision or the right to appeal. IC. 27-8-28-13(b) and 16(d)(4). Additionally, in the case of an appeal of a denial of a claim for benefits, an insurer shall appoint a panel of one or more qualified individuals to resolve the appeal. The panel must include one or more individuals who has knowledge of the medical condition, procedure or treatment at issue, is licensed in the same profession or has a similar specialty as the provider who proposed or delivered the health care service, and who was not involved in the initial investigation of the claim. I.C. 28-8-28-17(b).
Employee benefit plans, including plans providing long term disability benefits and healthcare benefits, must substantially comply with ERISA's regulations in processing claims for benefits. If the employee benefit plan administrator fails to substantially comply with these regulations in the initial investigation and determination of a claim or during the appeal process, the plan administrator may be found to have acted in an arbitrary and capricious manner, and the adverse determination may be deemed to be procedurally unreasonable by a court of law.