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How to Challenge a Denial of Life Insurance Benefits Under ERISA

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One of the important rules of claiming benefits under an ERISA plan is to follow the rules set forth by the plan, so long as the rules are compliant with ERISA.  Under ERISA, a plan administrator is permitted to require claimants to go through administrative appeals prior to filing a lawsuit.  Failure to follow these rules can result in a lawsuit claiming the benefits to be dismissed on procedural grounds.

In Orr v. Assurant Employee Benefitsr, 786 F.3d 596 (7th Cir. 2015), the employee died, and his beneficiaries claimed life insurance benefits under a group life insurance plan governed by ERISA.  The benefits were originally denied under the terms of the plan, because the employee allegedly died in an accident while intoxicated.   The terms of the plan required two levels of administrative appeals.  The beneficiaries did not engage in both administrative remedies, and filed suit.  The administrator advised plaintiffs of the two required appeals, and specifically stated that the failure to complete both reviews could result in dismissal of a lawsuit.

The court first rejected plaintiffs’ argument that they had pursued two appeals, and concluded that they had not exhausted their administrative remedies. Te court also found that exhaustion would not have been futile.

Generally, a failure to exhaust administrative remedies will be excused in few limited circumstances—when resort to administrative remedies would be futile, Gallegos v. Mount Sinai Med. Ctr., 210 F.3d 803, 808 (7th Cir. 2000), when the remedy provided is inadequate, id., or where there is a lack of access to meaningful review procedures, Schorsch v. Reliance Standard Life Ins. Co., 693 F.3d 734, 739 (7th Cir. 2012). The Orrs do not claim that further pursuit of administrative review would have been futile, that the administrative remedy sought is inadequate, or that they were denied access to meaningful review procedures.

The court also rejected plaintiffs’ “novel grounds” to excuse the exhaustion requirement. As the Court explained, where the appeal procedure is clearly spelled out, a misinterpretation of their obligations cannot excuse a failure to exhaust.  Unfortunately, the deceased\’s beneficiaries were not give a full opportunity to challenge the denial of the life insurance benefit.  Had they been afforded the ability to mount a substantive challenge, the might have been able to receive the life insurance benefits.


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