An individual eligible for a company’s pension, life insurance, or disability insurance benefits is called a participant. The company that provides those benefits is called a provider or administrator. Often the administrator is a third party and not the company that employees the participant.
An administrator must follow certain steps prior to denying a participant’s application for benefits. First an administrator must establish and maintain reasonable procedures governing the filing of benefit claims, notifications of benefit determinations, and appeals of adverse benefit determinations. When denying a claim, the administrator must provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan was denied. In simple English, the administrator must state the specific reasons for denying the claim and reference the provisions of the plan for which the denial is based. After denying a claim, the administrator must provide the participant with a description of the plan’s review procedures and the time limits applicable to such procedures. Moreover, the administrator must inform the participant whether the administrator needs any additional information to make a favorable decision.
After an initial denial, an administrator must provide an opportunity for the participant to appeal the denial. During the appeal, the administrator must provide a full and fair review. During the entire review process, the administrators must ensure that benefit determinations are made in accordance with governing plan documents and that, where appropriate, the plan’s provisions have been applied consistently with respect to similarly situated claimants. The administrator must include a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following a denial on review; provide the specific rule or a statement that a rule was relied upon in making the adverse determination, and a statement that a copy of such rule will be provided free of charge to the claimant upon request.
To provide a full and fair review an Administrator must:
- Upon request of a claimant, provide free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.
- Take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination;
- Consult with a healthcare professional that has appropriate training and experience in the relevant medical field when deciding an appeal of any adverse determination that is based in whole or in part on a medical judgment.
- Conduct a second review that does not afford deference to the initial adverse benefit determination.
- Have the person that conducts the second review be a new person and not be a subordinate of the person that performed the initial determination.
- Consult a healthcare professional for an appeal of an adverse determination. This healthcare should not be the individual who was consulted in connection the with initial adverse benefit determination that is the subject of the appeal nor the subordinate of any such individual.
In the Fourth Circuit, which Maryland is in, administrators cannot identify a new reason on appeal to justify why a participant is ineligible for benefits without giving the beneficiary the opportunity to appeal the new reason for the denial. Moreover, prior to terminating benefits, an administrator needs to rely on substantial evidence and consider all symptoms, not just a select few.