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How Long Does a Disability Insurer Have to Consider an Employee’s Appeal of a Denied Claim?

L. Jason Cornell, Esq. Jan. 5, 2023

What are an employee’s options when he or she submits a disability claim to an insurer and the insurer denies the claim?  When Congress created ERISA, the statute governing the country’s private benefit plans, one of its stated goals was to promote resolution of disability claims through non-adversarial and informal proceedings. Said another way, Congress hoped to create a framework that would allow for disability claims to be resolved without litigation.

Unfortunately, disability insurers often deny employee claims for all the wrong reasons. When this happens, an employee needs to quickly assess what his or her options are.  An employee may be able to sue the insurer in federal court to enforce the terms of the plan, however, there are limitations. In most situations, an employee must exhaust all administrative remedies before filing a lawsuit. This means that the employee must make a claim and if the claim is denied, pursue an appeal consistent with the language of the policy and federal statutes.

Under 29 CFR 2560.503-1(i)(3)(i), an insurer or claim administrator has 45 days after an employee files an appeal to issue a decision.  In order for an insurer to qualify for an extension of the 45-day deadline, the insurer must provide notice indicating “special circumstances requiring an extension of time and the date by which the plan expects to render the determination on review.”  See 29 CFR 2560.503-1(i)(1)(i). If the insurer fails to comply with relevant deadlines, the employee is deemed to have exhausted his or her administrative remedies and can file a lawsuit in federal court.