Time's Up! Court Strictly Applies ERISA Claim Review Deadlines

The Seventh Circuit recently issued a stern warning about the importance of strict compliance with ERISA claim review timeframes in holding that the “substantial compliance” standard “does not apply to blown deadlines.” In this case, Fessenden v. Reliance Standard Life Ins. Co. (7th Cir. 2019), the disability plan administrator issued a decision on review about eight days after the time prescribed by ERISA. In the short time period after the ERISA deadline expired and before the decision on review was rendered, the claimant filed suit as he was deemed to have exhausted his administrative remedies. Had the plan administrator’s decision been timely, the court would have applied a deferential standard of review. However, the court rejected the plan administrator’s argument that a deferential standard still applied in light of its “substantial compliance” with ERISA’s deadlines. Rather, the Seventh Circuit found that “[w]hen a plan administrator commits a procedural violation … it loses the benefit of deference and a de novo standard applies.” Although this holding is not universally adopted throughout the federal circuit courts, it is a stark reminder that a late final decision may affect more than the timing of a lawsuit, it may also impact the standard of review.

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