In this case, Tiffany Ausler (“Ausler”) worked as a software engineer for Boeing Corporation (“Boeing”). Because she was a Boeing employee, Ausler was covered under both short-term and long-term disability compensation plans where Aetna Life Insurance Company (“Aetna”) was the administrator of the plans. The plan brochure explains that an employee may be eligible for short-term disability benefits if the employee becomes disabled as the result of a pregnancy-related condition, accidental injury, or illness. Further, after being disabled for twenty-six weeks, an employee “may be eligible for benefits under the [long-term disability] plan.”
The plan explained the process of submitting a long-term disability claim as follows:
“If you are receiving benefits under the Short-Term Disability Plan and you continue to be disabled, you do not need to submit a claim for long-term disability benefits under this plan.
. . .
If you are not receiving benefits under the Short-Term Disability Plan, you will need to initiate a claim for long-term disability benefits by calling Boeing TotalAccess at the start of your medical leave.
. . .
You must initiate your claim within 90 days of the date your 26-week waiting period under this plan ends . . . A claim submitted more than one year after your 90-day disability claim-filing period will not be covered unless you are legally incapacitated.”
In December of 2014, Ausler filed a claim for both short- and long-term disability benefits explaining that she had a total disability. She supported her claim with documentation from her medical provider. Aetna responded stating “that the evidence does not support disability as defined by your group policy,” then chose to deny Ausler’s claim. Aetna further said that Ausler “[had] not met the 26 [week] waiting period” which was required under the plan.
Ausler appealed the denial of her STD claim. Aetna sent another letter stating that it stood behind its original decision and it said that:
“If you don’t agree with our appeal decision, you can file a lawsuit under section 502(a) of a law called ERISA. If you wait too long, you may lose your right to file a lawsuit based on this claim. Make sure to check your plan brochure or summary plan description to see if it gives you the time frame to file a lawsuit.”
The long term disability plan specified that:
“except as otherwise provided in an insured contract, you must bring any legal action within 180 days of the
• Decision on appeal of your claim for benefits or eligibility or;
• Expiration of time to take an appeal if no appeal is taken.”
Ausler ultimately filed a lawsuit against Aetna. However, that suit was filed on February 26, 2018, which was 1,095 days after the appeal’s denial letter was sent out by Aetna. The main dispute of Ausler’s suit was that Aetna’s denial of her claim was an abuse of discretion.
In its defense against her lawsuit, Aetna argued that Ausler’s STD claim should be dismissed as untimely because she did not comply with a 180-day time limit to file a lawsuit, which was a requirement of the plan. Aetna further argued that Ausler could not legally pursue a claim for long-term disability benefits because she had not gone through and exhausted the plan’s entire appeal procedure as required by the LTD plan.
Ausler responded that the plan’s language is ambiguous and that the 180-day period was too short. More specifically, she stated that because the Benefits Claims Process subsection of the plan does not provide the 180-day period, that it only applies to eligibility claims.
The court found that there are a number of times where the 180-day period is clearly indicated to be applicable to more than just eligibility claims. For example, Section 9 of the plan says “[t]his section describes two types of claim review and appeal procedures . . . : Benefit claims and appeals [and] Eligibility claims and appeals.” The What You Can Do if Your Appeal Is Denied section further says that employees would need to “bring any legal action within 180 days of the [d]ecision on appeal of your claim for benefits or eligibility.” Lastly, the time limit provision also explains that it applies to appeals that were denied by “the service representative or the Committee.” The “service representative” only applies to benefits claims, while “the Committee” deals with eligibility claims. Therefore, because “service representative” is listed as one of the two options here, this provision must apply to Ausler’s claim as well.
As for the LTD claim, remember that Auler never even filed a claim for LTD benefits. Ausler argued that she did not have to “exhaust” Aetna’s process for long-term benefits because (a) she was not approved for short-term disability benefits and therefore (b) the STD claim did not roll into LTD benefits.
Her argument was one of “futility” – that because she did not receive short-term benefits, she would not have qualified if she had further pursued long-term disability benefits.
The court did not agree. The court cited case law to explain its opinion. “In [the Eighth Circuit], benefit claimants must exhaust [the benefits appeal] procedure before bringing claims for wrongful denial to court.” Further, when “a claimant fails to pursue and exhaust administrative remedies that are clearly required under a particular ERISA plan, [her] claim for relief is barred.” Yet, “[a] party may be excused from exhausting administrative remedies . . . if further administrative procedures would be futile,” and “[a]n administrative remedy will be deemed futile if there is doubt about whether the agency could grant effective relief.”
According to the court, the second paragraph of the long-term disability claim process cited how to submit a long-term disability claim “[i]f you are not receiving benefits under the Short-Term Disability Plan.” The court’s reasoning was that such a paragraph would not need to exist if you had to be granted short-term disability before filing for long-term disability. The court also stated that Ausler did not cite any language which requires that she must be approved for short-term disability in order to apply for long-term disability benefits. As a result, Ausler’s failure to begin a claim for long-term disability in the first place prevents her from seeking relief for long-term disability benefits.
Overall, the court decided that Ausler failed to meet the 180-day time period as required by the STD plan, and that she additionally failed to exhaust her denial for long-term disability benefits. Therefore, in the end, the court ruled in favor of Aetna and against Ausler.[Note: this claim was not handled by the Ortiz Law Firm. It is merely summarized here for a better understanding of how Federal Courts are handling long term disability insurance claims.]
Here is a copy of the decision in PDF: