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1st Cir – Untimely Appeal

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  • 1st Cir – Untimely Appeal

    Here’s a new case out of the First Circuit titled Theresa Fortier v. Hartford Life and Accident Insurance Company. The issue before the court is whether the plaintiff timely filed her administrative appeal or, if not, should that be excused under the substantial compliance doctrine or the state law notice-prejudice rule. The court concludes that the appeal was untimely and neither of those equitable doctrines save the plaintiff. The plaintiff filed an appeal letter on March 7, 2014 and Hartford denied the right to appeal saying that the appeal was received 2 months after the expiration of the 180 day deadline.

    The court first holds that the 180 day deadline ran from the date of the receipt of the denial letter.

    Fortier argues that an ERISA regulation defining an "adverse benefit determination" requires that the 180-day time limit start at the date of termination of benefits and not from the date of notice. This argument fails.

    Fortier's reading of ERISA regulations is plainly wrong. The relevant ERISA regulation does not define an "adverse benefit determination" as a "contemporary cessation of benefits," as Fortier contends. The ERISA regulation concerning notice of an adverse benefit determination states in part that a complying group health plan must "[p]rovide claimants at least 180 days following receipt of a notification of an adverse benefit determination within which to appeal the determination." 29 C.F.R. § 2560.503-
    1(h)(3)(i) (emphasis added). Notice is the key event. The ERISA regulations do not require that the time limit for an administrative appeal run from the date of termination of benefits.
    The court then finds that the doctrine of substantial compliance does not apply.

    The judicially-created doctrine of "substantial compliance," an ERISA doctrine, has been applied to excuse an insurer's failure to comply precisely with ERISA's notice requirements, so long as the insured person was "supplied with a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear understanding of the administrator's position to permit effective review." Niebauer v. Crane & Co., 783 F.3d 914, 927 (1st Cir. 2015) (quoting Terry, 145 F.3d at 39); see Santana-Díaz v. Metro. Life Ins. Co., 816 F.3d 172, 178 (1st Cir. 2016). In fact, the doctrine assists with the prompt review of denial of benefits, and Fortier is arguing for delay, not prompt review.

    Fortier makes a fairness argument: since Hartford has at least once had the doctrine applied in its favor, Fortier should receive the benefit of the doctrine. See, e.g., Topalian v. Hartford Life Ins. Co., 945 F. Supp. 2d 294, 339 (E.D.N.Y. 2013) (finding that "Hartford was in substantial compliance with the [Department of Labor]'s regulatory deadlines" despite Hartford making a late benefit determination). Neither the caselaw nor 29 C.F.R. § 2560.503-1(b)(5) supports Fortier's argument.

    • • •

    As in Edwards, see id. at 359, the Plan here contained a clear deadline for appeals of adverse benefit determinations. In coming to its conclusion, the Seventh Circuit determined that, though the plan administrator had discretion to consider an untimely appeal, the claimant "ha[d] never offered an explanation for the untimeliness of her appeal that would warrant such an exercise of discretion in her favor [by the plan administrator]." Id. at 362. The same is true here. We find convincing the concerns about the harms that would result from applying the substantial compliance doctrine to excuse a claimant's failure to meet the exhaustion requirement.
    Finally, the court concludes that the notice-prejudice rule does not apply.

    The Seventh and Ninth Circuits have agreed that state common law notice-prejudice rules do not apply to ERISA appeals. See Edwards, 639 F.3d at 363; Chang, 247 F. App'x at 878. Indeed, no federal court has applied any state's common law notice-prejudice rule to excuse a late administrative ERISA appeal. See, e.g., Chang, 247 F. App'x at 878 ("[T]o extend the notice-prejudice rule to ERISA appeals would extend the rule substantially beyond its previous uses.").

    We add that New Hampshire has never suggested that its notice-prejudice rule applies to ERISA appeals, and note that the state has only applied the doctrine where the facts involve an initial claim made in an occurrence-based insurance policy. See, e.g., Bianco Prof'l Ass'n v. Home Ins. Co., 740 A.2d 1051, 1057 (N.H. 1999). There is no reason to think that the New Hampshire courts would countenance Fortier's attempted use of the notice-prejudice rule.
    The opinion is attached below.
    Attached Files