{"id":1818,"date":"2020-10-13T21:10:01","date_gmt":"2020-10-13T21:10:01","guid":{"rendered":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/?p=1818"},"modified":"2022-08-03T20:36:03","modified_gmt":"2022-08-03T20:36:03","slug":"include-exhaustion-requirements-in-plan-documents","status":"publish","type":"post","link":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/include-exhaustion-requirements-in-plan-documents\/","title":{"rendered":"Include Exhaustion Requirements in Plan Documents"},"content":{"rendered":"

The subject of administrative exhaustion requirements and the importance of including them in employee benefit plan documents were recently highlighted in a U.S. Court of Appeals for the Sixth Circuit Court decision. In the case of Wallace v. Oakwood Healthcare, Inc.<\/em>, the Sixth Circuit affirmed the Eastern District of Michigan Court\u2019s decision that the plaintiff, Wallace, a Registered Nurse who had contracted an illness while traveling, did not have to exhaust her plan options before pursuing litigation to claim benefits, specifically long-term disability benefits that her employer, Oakwood Healthcare, Inc. provided.  She had submitted claims to the two insurance companies involved: The Hartford Life and Accident Insurance Company, which initially funded and insured the plan, and Reliance Standard which became the insurer of the company\u2019s long-term disability plan.<\/p>\n

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\"Steps<\/figure>\n<\/div>\n

The Court\u2019s Decision Based on Lack of Proper Content in Plan<\/h3>\n

The Sixth Circuit\u2019s decision was based on its holding that the exhaustion requirement in the claim\u2019s denial letter was not sufficient because, \u201cfor a plan fiduciary to avail itself of this Court\u2019s exhaustion requirement, its underlying plan document must \u2013 at minimum \u2013 detail its required internal appeal procedures.\u201d The Sixth Court went on to also reject the argument that the plan had \u201csubstantially complied\u201d with ERISA, stating that \u201c a plan document that does not include either procedures for review of denied benefits claims or the remedies for such claims is wholly non-compliant. Also noted by the Sixth Circuit in its decision was that plan document failed to include any information about the review procedures or remedies available for denied claims, and was \u201cactively misleading\u201d by mentioning ERISA and the internal claims and appeals process only in an arbitration section of the plan document which did not apply to the plaintiff\u2019s benefit claim.<\/p>\n

ERISA\u2019s Intent<\/h3>\n

In addition to pointing out what does not sufficiently meet ERISA\u2019s administration exhaustion requirements, the Sixth Circuit\u2019s decision also sheds light on what ERISA\u2019s intent is with respect to these requirements. The Court stated, \u201c\u2026one of ERISA\u2019s central goals is to enable beneficiaries to learn their rights and obligations at any time including before a denial of benefits.\u201d This is one of the reasons why plans are required to be developed and maintained in a written document so that plan beneficiaries understand their rights and obligations.<\/p>\n

The Takeaway for Plan Sponsors<\/h3>\n

The lesson learned here is that a plan documents and Summary Plan Descriptions (SPDs) must contain specific language regarding your administrative rights.  It should provide details as to the claims review processes and procedures and next steps relating to the denial of claims.  It should not be misleading such that employees do not believe they have any other administrative entitlements.<\/p>\n","protected":false},"excerpt":{"rendered":"

The subject of administrative exhaustion requirements and the importance of including them in employee benefit plan documents were recently highlighted in a U.S. Court of Appeals for the Sixth Circuit Court decision. In the case of Wallace v. Oakwood Healthcare, Inc., the Sixth Circuit affirmed the Eastern District of Michigan Court\u2019s decision that the plaintiff,… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/posts\/1818"}],"collection":[{"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/comments?post=1818"}],"version-history":[{"count":2,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/posts\/1818\/revisions"}],"predecessor-version":[{"id":2129,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/posts\/1818\/revisions\/2129"}],"wp:attachment":[{"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/media?parent=1818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/categories?post=1818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.amalgamatedbenefits.com\/amalgamated-employee-benefits-administrators\/wp-json\/wp\/v2\/tags?post=1818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}