Long Term Disability: Denial Letter Under ERISA

The grant of long term disability benefits under an ERISA plan is not a permanent award.

The insurance contract permits periodic review of the grant of benefits and coverage can be terminated if the insurance company finds that the beneficiary is no longer disabled as defined by the Plan. Litigation for wrongful denial of benefits is discussed in other articles.

Notice Requirements of Denial of Coverage

Section 503 of ERISA requires that every plan must provide proper notice of denial of benefits. Section 503 requires the following:

1. "provide adequate notice in writing to any participant or beneficiary whose claims for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
2. afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim."

The Regulations

The minimum requirements of an adverse benefit determination must set forth:

"[In] a manner calculated to be understood by the claimant...(i) [t] specific reason or reasons for the adverse determination; (ii)[r]eference to the specific plan provisions on which the determination is based; (iii) [a] description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary[.]" 29 C.F.R. sec. 2560.503.1(a).

Violation of the Regulations

A violation of the regulations is a violation of ERISA but is not sufficient in and of itself, to reverse an adverse determination. However, most likely the violation is accompanied by other administrative actions may constitute an abuse of discretion and a reversal of the denial of benefits.