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Fortier v. Hartford Life & Accident Ins. Co., 916 F.3d 74 2019 EB Cases 55547 (1st Cir. 2019) (exhaustion of administrative remedies).
Fortier received long-term disability (LTD) benefits under a group disability plan insured by Hartford Life & Accident Insurance Company (“the Plan”). The Plan only pays 24 months of benefits for disabilities caused by mental illnesses. Hartford approved and paid Fortier’s LTD benefits before sending her notice on September 13, 2011 that her benefits would terminate in the future on November 1, 2011 due to the Plan’s Mental Illness Limitation. The letter informed Fortier of her right to appeal within 180 days of the date that she received the letter. Fortier retained an attorney who submitted a timely appeal and was able to get her benefits reinstated. Shortly after reinstating her claim, Hartford explained that since it did not give Fortier prior notice of the application of the Mental Illness Limitation, it was starting the 24-month period as of September 13, 2011 and no benefits will be payable beyond September 12, 2013.
After completing an investigation and review of Fortier’s claim, Hartford notified Fortier’s attorney by letter dated July 17, 2013 that it would stop paying benefits on September 13, 2013 because it had determined that the Mental Illness Limitation applied to the claim. The letter also notified Fortier of her right to appeal within 180 days of receipt of the letter. Fortier did not appeal within 180 days but sent in a letter purporting to appeal two months after Hartford’s stated deadline. Hartford declined to consider the appeal because it was untimely.
The First Circuit rejected the plaintiff’s argument that the 180-day period should run from the date of the termination of benefits and not from the date of the July 17, 2013 notice of the adverse decision. It held that the 180-day time limit to appeal an adverse benefit determination began to run from the date of the notice of the determination. The court also found that Hartford followed the terms of the Plan, which were consistent with ERISA’s requirements, when it provided her notice of the benefit determination and her right to appeal within 180 days.
Although the doctrine of “substantial compliance” has been applied to excuse an insurer’sfailure to comply with ERISA’s notice requirements, it does not apply to late appeals by claimants. The court agreed with the Seventh Circuit’s decision in Edwards v. Briggs & Stratton Ret. Plan, 639 F.3d 355 (7th Cir. 2011), which reasoned that applying the doctrine to the exhaustion requirement “would render it effectively impossible for plan administrators to fix and enforce administrative deadlines while involving courts incessantly in detailed, case-by-case determinations as to whether a given claimant’s failure to bring a timely appeal from a denial of benefits should be excused or not.” Id. at 362. The court also explained that nothing in the ERISA regulations is undermined by insurers applying deadlines strictly against plan participants.
Lastly, like the Seventh and Ninth Circuits, which have considered this issue, the court held that New Hampshire’s common law notice-prejudice rule does not apply to ERISA appeals: “[t]he exhaustion requirement — and several of its underlying policy goals — would be undercut by an extension of a state law notice-prejudice rule to ERISA appeals.”