In my last post, How Long Can Cigna Take To Decide My ERISA Long Term Disability Claim?, I explained the federal law that spells out Cigna’s deadlines for deciding your disability insurance claim and how long an ERISA administrator like Cigna may take to decide a claim or appeal. In this article, I want to explain an option which we often (but not always) recommend to our clients when Cigna delays its decision so long that it misses its deadline to decide your disability claim.
Sue Cigna when it delays the decision on your disability insurance claim too long.
One tactic that you may use when Cigna drags its feet and misses its deadline to decide your case is to immediately sue Cigna in court. The federal regulations include a provision which is commonly called the “deemed denied” or “deemed exhausted” doctrine. It is found in 29 C.F.R. § 2560.503-1(l), and if a claim administrator like Cigna fails to act in the time spelled out in a) its own plan documents or b) the ERISA regulations, then the law automatically declares that you no longer have to go through the pre-lawsuit claim process, and you may pursue all legal remedies under ERISA. This means that when Cigna drags its feet and does not decide your initial claim or your appeal for disability insurance, you are free to sue Cigna, even if there are more appeals that you would normally have to pursue before suing the insurance company.
Depending on the jurisdiction, suing Cigna when it blows the deadline for deciding your ERISA disability claim can greatly increase your chances of winning the case.
In court, judges must look at ERISA cases in a certain way. Years of court cases have developed what is called the “arbitrary and capricious standard of review.” This standard applies to most ERISA disability plans, and a judge who decides your disability insurance case may only rule in your favor and order Cigna to pay benefits if the judge decides
- that Cigna was wrong (i.e. the Judge thinks you are disabled based on the evidence in Cigna’s claim file), AND
- that Cigna’s decision was arbitrary or without any rationale, i.e. that it was not supported by any reasonable evidence at all.
In some parts off the country, you may be able to take away #2, and just have the Judge decide the case solely based upon #1 – their interpretation of the evidence – if the disability insurance company does not decide your case by the deadlines in the ERISA claim regulations.
This means that in some courts, when Cigna delays so much that it violates the federal timing regulations that apply to ERISA claims, you may be able to ease the stringent arbitrary and capricious standard that otherwise would apply to Cigna’s decision and have the judge use a better standard. When you take away the “reasonable evidence” factor, it changes the standard of review to an easier standard to meet called “de novo.” As an ERISA claimant, you want the de novo standard of review. When de novo review applies to your case, the judge will weigh the evidence and decide if you are disabled under the ERISA plan’s definition of disability only. The judge will not defer to Cigna’s decision in any way. If the Judge thinks you are disabled, you win your ERISA disability claim, no matter what evidence Cigna had in its file.
The majority of the U.S. Circuit Courts of Appeal that have considered the question have held that de novo review applies to an ERISA claim administrators decision when the deadlines in the regulation are not met. See Nichols v. Prudential Ins. Co. of Am., 406 F.3d 98, 109 (2d Cir. 2005) (de novo review applies to “deemed denied” appeal); Gritzer v. CBS, Inc., 275 F.3d 291, 295-96 (3d Cir. 2002) (failure of plan administrator to actually exercise discretion granted to it under plan warrants de novo review); Seman v. FMC Corp. Retirement Plan For Hourly Employees, 334 F.3d 728, 733 (8th Cir. 2003)(“When a plan administrator denies a participant’s initial application for benefits and the review
panel fails to act on the participant’s properly filed appeal, the administrator’s decision is subject
to judicial review, and the standard of review will be de novo.”); Jebian v. Hewlett-Packard Co. Employee Benefits Org. Income Protection Plan, 349 F.3d 1098, 1103 (9th Cir. 2003) (“where . .
. a claim is ‘deemed . . . denied’ on review, there is no opportunity for the exercise of discretion
and the denial is usually to be reviewed de novo.”); Rasenack v. AIG Ins. Co., 585 F.3d 1311,
1315-1318 (10th Cir. 2009) (where administrator fails to render a timely final decision, claimant’s
administrative remedies are deemed exhausted by operation of law rather than through the exercise
of administrative discretion and, therefore, de novo review applies). These are the higher courts that create precedent which the lower courts must follow.
Only two Circuit Courts have rejected this and held that arbitrary and capricious review continues to apply. See Southern Farm Bureau Life Ins. Co. v. Moore, 993 F.2d 98, 101 (5th Cir. 1993); Daniel v. Eaton Corp., 838 F.2d 263, 267 (6th Cir. 1988).
Why is this division between the courts important? Where your lawsuit is heard should be a key consideration for you and your attorney if a delay by Cigna is involved in your claim. For example, two District Court decisions in Kentucky (part of the Sixth Circuit) have held that a Cigna subsidiary that missed claim deadlines still got the benefit of arbitrary and capricious review, following the Sixth Circuit’s decision in Daniel v. Eaton. See Hatfield v. Life Ins. Co. of N. Amer., 2015 WL 5680347, *3 (E.D. Ky. 9/25/2015); and Van Winkle v. Life Ins. Co. of N. Amer., 944 F.Supp.2d 558, 560-63 (E.D. Ky. 2013). You usually have a choice among several different jurisdictions when deciding where to file a lawsuit against a disability insurer like Cigna. Having a disability insurance attorney who understands this split in the law and who is willing to talk with you to make decisions about where to file your lawsuit is crucial for you. You must have a knowledgable ERISA disability attorney if you want to the best law to apply to your case.
So how do you get the Judge to use de novo review in your case when Cigna delays its decision too long?
You must file suit after the Cigna’s deadline, but before Cigna writes a late decision letter on your claim or your claim appeal. In other words, you have to sue sue the disability insurance company before it writes the letter deciding your long term disability claim. BUT….you cannot sue Cigna before Cigna’s deadline expires. You have to give them the time I explained in my last blog post – up to 105 days on the initial claim or 90 days during the appeal (plus any suspended time that applies under the law).
Another variation in the law revolves around how long Cigna delays the decision. Depending on the law in the federal circuit where your case is pending, Cigna may still be given a “reasonable” amount of time after the deadline has plainly passed before they lose the arbitrary and capricious standard. However, if you file suit after the deadline passes, but before Cigna decides your long term disability claim or appeal, you have a strongest argument to be used in court that you should get “de novo” review.
Hire Experienced ERISA Attorneys To Give You the Best Chance of Winning
Having an experienced ERISA disability attorney who knows how to use the law in your favor to fight Cigna’s delaying tactics can greatly increase your chances of winning. John Tucker and his team of disability benefits attorneys uses every possible argument to strengthen your case. Often in Cigna ERISA disability cases, the more technical legal arguments you can make like the one I describe here, the stronger your case may be. You want an attorney that will know about these tactics, discuss options like this with you, and one who will understand which court may present the best chance of winning when Cigna delays your case and you choose to file a lawsuit.
Attorney John V. Tucker has sued Cigna and other disability insurers hundreds of times over the past 24 years. Mr. Tucker is frequently invited to lecture on disability and ERISA topics like the one described in this article. If Cigna has taken too long to decide your your ERISA disability insurance claim or appeal, contact Cigna Disability Insurance Attorney John V. Tucker online or call (866) 233-5044.