Aetna Entitled to Deferential Judicial Review; Court Declines to Defer to DOL Statement

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June 2 — Declining to defer to Department of Labor interpretive guidance, a federal judge found that Aetna Life Insurance Co.'s 182-day span in denying a disability benefits claim didn't cause the insurer to forfeit the benefit of deferential judicial review .  

Specifically, the court afforded no deference to the preamble of a 2000 DOL regulation, in which the Department expressed its intention that decisions made by plan administrators “in the absence of the mandated procedural protections” shouldn't be entitled to judicial deference.

The participant, Jill M. Lundsten, argued that Aetna's failure to strictly comply with DOL regulations imposing a 45- or 90-day deadline for reviewing claims caused the insurer to forfeit the benefit of deferential judicial review, while Aetna argued that the extra time was appropriately extended and tolled under the regulations.

In a May 30 opinion, Judge Rudolph T. Randa of the U.S. District Court for the Eastern District of Wisconsin found that Aetna's delay didn't warrant the application of de novo judicial review, because the insurer substantially complied with the relevant regulations.

Substantial Compliance Doctrine

Under the substantial compliance doctrine, a court will decline to penalize a plan administrator for minor procedural violations.

The court first found that the substantial compliance doctrine wasn't invalidated by an amendment to the relevant regulations. In 2000, 29 C.F.R. § 2560.503-1 was amended to provide that a plan's failure to follow claims procedures resulted in a claimant being deemed to have exhausted administrative remedies, rather resulting in a deemed claim denial.

According to the court, the majority of courts considering this issue have found that the substantial compliance doctrine survived the 2000 amendment. Further, the court said that the statement of intention contained in the agency's preamble wasn't persuasive, because § 2560.503-1 was “completely silent” regarding the standard of review applicable in federal court.

Deferential Review Applies

Next, the court considered whether the substantial compliance doctrine applied to the facts of the case.

Specifically, the court said that Aetna's decision was delayed “pending the receipt of additional information” from Lundsten, her doctors or her family. Other delays resulted from Aetna's use of independent peer reviewers, the court said, finding that none of these delays were “excessive or unreasonable.”

Further, the court said that Aetna sent Lundsten six letters about the status of her appeal throughout the review process, and the parties spoke on the phone multiple times.

“The Plan should not be penalized for affording Lundsten the time and opportunity to submit information in support of her claim, and Lundsten should not be rewarded for failing to submit evidence that she promised to provide,” the court reasoned.

Given this, the court denied Lundsten's motion for partial summary judgment and held that arbitrary and capricious review applied.

Lundsten was represented by von Briesen & Roper SC and Cabaniss Law. Aetna was represented by Gonzalez Saggio & Harlan LLP.

Text of the opinion is at

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