MetLife Violates ERISA and Loses By Failing to Issue Timely Decision Letter
A federal judge in California took Metropolitan Life Insurance Company (MetLife) to task for its shoddy claim handling procedures involving a dentist who worked for the dental chain, Pacific Dental Services, Inc. Raymond Tash, DDS, became disabled, and MetLife intially approved his ERISA disability claim under the employer’s disability plan. Dr. Tash then began to experience a claim denial that is very common, starting with MetLife cutting off his benefit without telling him why.
As the case wound on, disability benefits were reinstated through a settlement, but then MetLife cut Dr. Tash’s disability check off again. He filed a lawsuit against MetLife seeking the unpaid ERISA disability benefits in the U.S. District Court for the Central District of California in September 2013. However, MetLife did not provide the documents or explanation for why benefits were cut off until months after the lawsuit was filed. In particular, MetLife produced a report MetLife relied upon from a Dr. Jon Glass, a physician picked by MCN, an insurance industry vendor which finds doctors to review files and examine disabled claimants.
The problem is that MetLife did not produce the report from Dr. Glass or the other information which explained its decision until two days before trial briefs were due to be filed in court! Not only did not MetLife not comply with ERISA regulations and send a timely disability decision letter; its documentation was send months after the lawsuit was filed! On its most fundamental level, the judge found that this utterly deprived Dr. Tash any ability to send evidence challenging MetLife’s decision or the basis for it at any time before the lawsuit started.
MetLife’s delay was the central issue in the judge’s final order. In his decision, the judge reviewed ERISA claim regulations and statutes, and provided an excellent explanation of the ERISA claim procedures and how ERISA cases are decided by courts:
ERISA trials are conducted on the paper record that the insurer had when it denied the claim, and the plaintiff usually has no opportunity to testify or otherwise introduce evidence outside this record. To add some fairness to this process, ERISA statutory and regulatory provisions create an administrative procedure in which the claimant has the opportunity to introduce relevant evidence into that record.… To know what evidence is relevant, claimants must know the reasons the insurer denied their claims. As such, ERISA requires an insurer making an “adverse benefit decision” to provide a written denial identifying the specific reasons for the denial so the insured can address them during the claim appeal process.…This requirement for a specific denial ensures that the insured has an opportunity during the administrative appeal process to submit evidence challenging the denial. This also ensures that the Court has a proper record to review the reason the insurer denied the claim and the insured’s evidence challenging the denial.…But this process is undermined where, as here, the fiduciary fails to issue a proper denial and fails to provide notice to the insured as to the issues in dispute.
The court also relied upon a decision from the Ninth Circuit Court of Appeal, Harlick v. Blue Shield of Cal., 686 F.3d 699, 720 (9th Cir. 2012), which explained:
Requiring that plan administrators provide a participant with specific reasons for denial enables the claimant to prepare adequately for any further administrative review, as well as appeal to the federal courts. A contrary rule would allow claimants, who are entitled to sue once a claim has been “deemed denied,” to be “sandbagged” by a rationale the plan administrator adduces only after the suit has commenced.
CASE: Raymond Tash v. Metropolitan Life Insurance Company, No. SACV 14-01914, 2016 WL 2944074 (C.D. California 5/16/2016).