ERISA-Seventh Circuit Rules That A Plan’s Notice Of Benefit Denial Did Not Comply With ERISA

In Kough v. Teamsters’ Local 301 Pension Plan, No. 10-2128 (7th Cir. 2011) (Nonprecedential Opinion), the plaintiff had suffered a disability, and then returned to work in 2005. He soon (in that year) suffered a heart attack and abandoned his attempt to work. He filed a claim for disability benefits under a union pension plan subject to ERISA (the “Plan”), but the claim was denied by the Plan. The plaintiff then filed this suit. The district court granted summary judgment against the plaintiff, and the plaintiff appealed. One issue for the Seventh Circuit Court of Appeals (the “Court”): did the letter from the Plan containing the benefit denial comply with ERISA?

The Court concluded that the Plan’s denial letter failed to comply with the notice requirements in section 503 of ERISA (29 U.S.C. § 1133) and the underlying regulations (at 29 C.F.R. § 2560.503-1(g)). In this case, the Plan’s denial letter merely stated that the plaintiff was not permanently disabled and thus not entitled to disability benefits under the Plan. Given the plaintiff’s prior disability and attempt to return to work, this denial letter did not comply with ERISA’s notice requirements. Specifically, contrary to those requirements, the denial letter did not provide all of the specific reasons for the adverse determination, did not reference the specific plan provision on which it was based, did not provide a description of any additional material required and why that material is necessary, did not include a statement of the plaintiff’s right to bring a civil action, and did not provide reference to the criteria relied on in making the adverse decision. Significantly, the letter did not state that the Plan required evidence from the Social Security Administration that the plaintiff’s disability from 2005 forward was related to his 2005 heart attack.

Given that the Plan’s denial letter did not meet the notice requirements of ERISA, the Court ordered that the case be remanded back to the Plan to determine, de novo, whether the plaintiff was entitled to disability benefits.

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