Proper Contents of a Denial Letter

The Employee Retirement and Income Security Act (“ERISA”) mandates that insurance companies and claims administrators provide claimants with the specific reasons for the denial or termination of employee benefits and the reasons for the denial must be in writing. See Militello v. Cent. States, Se. and Sw. Areas Pension Fund, 360 F.3d 681, 688 (7th Cir. 2004), cert. denied, 543 U.S. 869 (2004). The Department of Labor has promulgated regulations under ERISA which require certain information to be contained in a denial or termination of benefits letter. Specifically, 29 C.F.R. §2560.503(g) states:

Manner and content of notification of benefit determination.

(1)….The notification shall set forth, in a manner of calculated to be understood by the claimant –

(I) Reference to the specific plan provisions on which the determination is based;

(II) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary;

These requirements ensure that when a claimant appeals a denial to the plan administrator, he or she will be able to address the determinative issues and have a fair chance to present his case. Halpin v. W.W. Granger, 962 F.2d 685 (7th Cir. 1992). Describing the additional information needed, as required by this section, enables a claimant to gain a better understanding of the inadequacy of his claim and to gain a meaningful review by knowing with what to supplement the record. Wolfe v. J.C. Penney Co., 710 F.2d 388 (7th Cir. 1983).

Oftentimes the denial letter will contain a generic statement to the effect “[y]ou may also submit additional medical or vocational information, and any facts, data questions or comments you deem appropriate to give your appeal proper consideration.” However, this statement fails to meet the regulation requiring a description of the information necessary to perfect the claim and an explanation of why such material or information is necessary. If the insurance company or claim administrator fails to comply with these requirements, such as advising the claimant about their specific appeal rights or other documents that could be supplied to overturn the denial, the claimant’s right to a full and fair review of their denied claim is jeopardized. See Schneider v. Sentry Group Long Term Disability Plan, 422 F.3d 621, 629 (7th Cir. 2005). Lastly, the denial letter must advise a claimant of their right to bring a civil action under section 502(a) of ERISA following an adverse decision on appeal.

The regulations also provide criteria for employee benefit plans in order to establish a legitimate internal appeals process in which an employee can properly request a review of denied or terminated benefits. 29 C.F.R. §2560.503-1(h) states that every employee benefit plan 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 is full and fair review of the claim and the adverse benefit determination. The appeal procedures must:

(i) provide that a claimant shall be provided, upon request and free of charge, copies of all documents and information relevant to the claim.

29 C.F.R. §2560.503-1(h)(2). This offers the claimant the opportunity to obtain a complete copy of their claim file and policy in order to discover, among other things, what medical records may be missing from the file, what the physicians have reported to the insurance company and what the insurance company has been doing behind the scenes.

We review hundreds of denial letters a year involving denied disability, health and life insurance benefits. Oftentimes, the denial letters fail to meet the ERISA regulations above and therefore violate the law. A sure sign is when the denial letter is less than a page or two long possibly indicating that much of the required information has been left out of the denial letter. You have the right to be fully informed about the specific reasons your claim is being denied and the policy provisions upon which the insurance company is relying upon to deny your claim. You also have the right to request a complete copy of your claim file and to be advised of your right to pursue a lawsuit in federal court if you appeal is denied. If you are not fully advised of all of your rights under ERISA, contact the O’Ryan Law Firm at (855) 778-5055 for further assistance.