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6th Cir. – Failure to Make LTD Claim

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  • 6th Cir. – Failure to Make LTD Claim

    Here’s a new case out of the Sixth Circuit, William Kennedy v. LINA. In this matter, the court finds that the plaintiff failed to properly make a claim for LTD benefits. LINA initially denied the plaintiff’s STD claim, and provided him 180 days to appeal it. On the 180th day, LINA received an illegible letter, apparently from the plaintiff’s daughter. When LINA attempted to contact the plaintiff, they never received any response. Over two years later, LINA received letters from the plaintiff’s attorney seeking LTD benefits. LINA concluded that the claim was not properly made. The court first finds that a claim for short term disability benefits does not automatically make a claim for long term disability benefits.

    The district court was right: Kennedy never applied for long-term benefits. The first time he even mentioned long-term benefits was in his attorney’s letters—both of which came long after any such claim was due under the plan’s terms. Kennedy therefore failed to exhaust LINA’s administrative process. Garst v. Wal-Mart Stores, Inc., 30 F. App’x 585, 593 (6th Cir. 2002) (observing that exhaustion requires “compl[iance] with a reasonable time constraint imposed by the plan for administrative review of denial of [a] claim”).

    Kennedy nevertheless contends that LINA should have automatically treated his application for short-term benefits as one for long-term benefits too. He points to an internal policy under which LINA transitions claims for short-term benefits into claims for long-term benefits when short-term benefits “are expected to reach maximum duration” under the plan’s terms. R. 18-1, Pg. ID 831. But LINA did not expect that Kennedy’s short-term benefits would reach maximum duration, since it did not grant him short-term benefits in the first place. So the internal policy is inapplicable. Kennedy nonetheless insists that LINA should have expected his short-term benefits to reach maximum duration. But Kennedy did not challenge LINA’s denial of short-term benefits in this litigation, and in any event it is not at all clear why LINA should have reasonably expected Kennedy’s short-term benefits to reach maximum duration when it had not received sufficient documentation to grant any such benefits at all.
    Next, the court finds that the exception to this rule for workers’ compensation does not apply.

    Kennedy further argues that LINA’s denial of short-term benefits should not have prevented transition because LINA should have applied an exception under the internal policy. The exception applies when LINA denies short-term benefits because of an “exclusion”—such as worker’s compensation—in which case long-term benefits might still be available. Id., Pg. ID 832. In the next paragraph, the policy explains that, even though LINA denies short-term benefits, “the claimant may still be eligible for [long-term] benefits,” and instructs that “[t]heclaim should still be investigated for [long-term] benefits in a timely manner.” Id. In context, this exception makes sense. Many disability plans prevent double recovery for the same disability under both the plan and worker’s compensation. See, e.g., Ciaramitaro v. Unum Life Ins. Co. of Am., 521 F. App’x 430, 435 (6th Cir. 2013). But worker’s compensation payments may run out, in which case LINA will still consider an applicant’s eligibility for long-term benefits despite having denied short-term benefits under the exclusion.

    Kennedy attempts to swallow the rule with the exception, arguing that any time LINA denies an application for short-term benefits it must transition the claim to one for long-term benefits. But his reading fails to account for the remainder of the text of LINA’s policy, which limits the exception to exclusions and requires transition otherwise only where LINA expects short-term benefits to “reach maximum duration.” R. 18-1, Pg. ID 831–32. Not only that, but under Kennedy’s position, LINA would also have to transition every unsuccessful claim for short-term benefits—even when, for example, the applicant is perfectly healthy. That cannot be what the text of LINA’s internal policy envisions. Since LINA did not deny Kennedy benefits because of an exclusion, the internal policy is inapplicable. Kennedy’s argument on this front therefore fails.
    Finally, the court finds that the single reference to the LTD being open is not sufficient.

    Finally, Kennedy asserts that LINA did in fact transition his short-term claim to a long-term one, notwithstanding the inapplicability of its internal policy. He points to one cryptic line in the nearly 700-page administrative record, which reads, “Ltd 11/15/2012 Open.” Kennedy takes this line to mean that LINA opened an application for long-term disability benefits on Kennedy’s behalf on that date, even though Kennedy never asked for LINA to do so, and even though LINA denied him short-term benefits. But Kennedy fails to identify any support for this interpretation in the record. Notably, he points to nothing documenting the various actions that LINA’s policy would require LINA to take if it had transitioned his nonexistent short-term benefits, nor a decision on the purportedly transitioned claim. This absence is all the more telling given that the record does contain email confirmation following LINA’s receipt of the letters that Kennedy’s attorney later sent asking about Kennedy’s long-term benefits. One would expect some type of similar confirmation in the record if LINA had in fact transitioned a long-term benefit claim on Kennedy’s behalf on November 15, 2012. But the record contains no such confirmation. And so in light of the record as a whole, this one line does not demonstrate that LINA transitioned his short-term claim. Thus, the district court did not abuse its discretion in holding that Kennedy failed to exhaust his administrative remedies.
    The opinion is attached below.
    Attached Files