My Long-Term Disability Claim Has Been Denied Do I Have to Exhaust All Levels of Appeal Even If My Appeal Won’t Matter?

You paid your premiums, filed your claim when you were no longer able to work, and waited for your check. But instead of a check, you got a letter denying your claim. A long-term disability claim denial can be devastating.

Alternatively, your claim might have been accepted, but now you’ve gotten a letter from the disability carrier terminating your benefits.

The denial or termination letter should explain the basis of the denial or termination, your rights, and your obligation to file an appeal of the denial or termination.

Do I Have To Exhaust All Levels Of Appeal Before Going To Court?

The short answer is “Yes.”

Get out your policy or plan and look at the section that talks about filing an appeal of an adverse claim determination. It probably says that you must file an appeal within 180 days, or your claim is barred.

You can’t just go into court without filing an appeal and exhausting the administrative remedies required by the terms of the policy or plan.

But what are your obligations to file more than one appeal?

Do I Have To Exhaust All Levels Of Appeal Even If My Appeal Won’t Matter?

Again, the short answer is “Yes,” although there are rare exceptions, as I will explain.

Once again, we must look at the specific terms of the policy or plan. Some policies or plans offer an opportunity to file a second voluntary appeal if the first appeal is denied. However, other policies or plans require a second level of appeal.

You must read your policy carefully!

What happens if you don’t take the mandatory second level of appeal?

In the case of Castleberry v. The Lincoln National Life Insurance Company, 2020 WL 5831909 (M.D. Al. Sept. 30, 2020), Castleberry was injured while working as a truck driver. He had a cervical fusion and was paid 24 months of own occupation benefits.

His benefits were terminated after two years, and he appealed. But he appealed only once. Lincoln denied the appeal and Castleberry filed a lawsuit.

What Did The Court Do When Castleberry Did Not File A Second Level Appeal?

The plan required Casselberry to file two appeals. It was mandatory, and Lincoln asked the court to throw out the lawsuit since Castleberry did not file the second appeal.

Castleberry argued that filing a second appeal would have been futile and asked the court to allow his lawsuit to go forward.

It is true that one of the exceptions to filing an appeal is the futility argument, but ERISA claimants are excused from exhausting their administrative remedies only in “exceptional circumstances.” The plaintiff has the burden to prove by “clear and positive indication” that further appeal would be “for naught.”

Mr. Castleberry’s case was governed by Eleventh Circuit law which uses the “clear and positive” standard. Bare allegations of futility are not proof of futility.

Castleberry may well have believed with all his heart that another appeal would have been futile, but belief is not fact. He did not provide any clear and positive evidence, and the court dismissed his lawsuit. Unfortunately for Castleberry, the 180-day period to submit a second level appeal had expired, making it impossible for him to now exhaust his administrative remedies before filing suit again. His impatience (and probably the negligence of his attorney) destroyed his case.

The Lesson Learned In This Long Term Disability Claim Appeal?

Regardless of how angry you are that your claim has been denied or terminated, you must exhaust all your appeals before you sue the disability carrier or plan. It’s as simple as that. Don’t give the disability carrier an easy win.!

Call today at 727-477-3263 to learn more about filing a timely appeal of your denied or terminated long term disability benefits. Don’t delay!