Riemer Hess Convinces NY Federal Court That First Reliance Violated ERISA’s Regulations

Riemer Hess Secures Legal Victory on Behalf of Financial Engineer with a TBI

Riemer Hess LLC is proud to announce a significant legal victory in Rhodes v. First Reliance Standard Life Insurance Company, No. 22 CIV. 5264 (AKH), 2023 WL 3099294 (S.D.N.Y. Apr. 26, 2023).  The Court’s decision sends a powerful message to long term disability insurance companies: they will be held accountable for failing to follow the regulations provided by the Employee Retirement Income Security Act of 1974 (ERISA).

The plaintiff, Mr. William Rhodes, a Financial Engineer for a major financial institution, filed a claim for disability benefits after suffering a traumatic brain injury (“TBI”).  First Reliance initially approved Rhodes’s claim but later terminated his benefits and denied his appeal.  After the appeal denial, Mr. Rhodes consulted with Riemer Hess to sue First Reliance on his behalf.

In the litigation, Judge Alvin K. Hellerstein granted Rhodes’s motion for a de novo standard of review, holding that First Reliance failed to “strictly adhere” to ERISA’s claims procedure regulations.  As a result, the Court would apply no deference to First Reliance’s previous decision, even though the plan granted discretion to First Reliance.

Riemer Hess’s Successful Argument Against First Reliance

Riemer Hess convinced the Court that First Reliance failed to strictly adhere to the regulations in three different ways:

1. First Reliance failed to consult with an appropriately qualified health care professional on appeal
   Riemer Hess contended that First Reliance violated the regulations by having only a PhD-trained neuropsychologist to review Rhodes’s records, rather than a medical doctor.  Riemer Hess argued that Rhodes’s medical records contained evidence of physical abnormalities associated with his TBI (for example, vestibular dysfunction and visual difficulties) that required the expertise of a medical doctor, such as a neurologist.  First Reliance argued that a neuropsychologist was qualified to evaluate Rhodes’ medical conditions and provide an opinion on his functional capacity.  The Court agreed with Riemer Hess, finding that, given the documentation of physical manifestations and abnormalities in Rhodes’ medical record, First Reliance's failure to consult with a medical doctor constitutes a violation of ERISA’s full and fair review requirements under 29 C.F.R. § 2560.503-1(h)(3)(iii).
   
   
2. First Reliance failed to afford Plaintiff the opportunity to respond to a physician addendum report
   On the second point, Riemer Hess argued that First Reliance did not provide Rhodes with an opportunity to respond to an addendum report from the reviewing doctor before rendering a final benefits determination.  First Reliance argued that the addendum report did not constitute “new or additional evidence,” as it stated that the doctor's opinions remained unchanged.  The Court agreed with Riemer Hess, finding that the addendum report qualified as new medical evidence and First Reliance's failure to provide Rhodes with the report and an opportunity to respond violated the claims procedure regulations at 29 C.F.R. § 2560.503-1(h)(4)(i).
   
   
3. First Reliance exceeded all possible deadlines on appeal
   Riemer Hess argued that First Reliance exceeded the allowable time for rendering a decision while processing Rhodes’s appeal.  The ERISA regulations state that a decision should be made within 45 days, with the possibility of an extension for special circumstances.  First Reliance sent a letter to Rhodes indicating that it would take longer to make a decision as it awaited additional information.  However, the Court found that First Reliance improperly tolled the benefit determination period for an extended period of time, violating the regulations.

The Court's full decision in this case can be read here.

Conclusion

Ultimately, the Court’s ruling in Rhodes v. First Reliance Standard Life Ins. Co. reflects the successful efforts of Riemer Hess in holding long term disability claim administrators accountable for their procedural violations.  Following the Court’s decision, First Reliance agreed to pay retroactive benefits owed for the first two years of eligibility, together with 9% interest, and to reconsider Mr. Rhodes’s claim for ongoing benefits thereafter.  The Court stayed the action, pending the outcome of that review, which is ongoing as of June 2023.

Disability insurance claims can be confusing and complicated.  With so much at stake for you, your family, and your future, we understand how important your case is.  The experienced attorneys at Riemer Hess will fight the insurance companies for you.

Riemer Hess can assess your situation, explain your legal rights and options, and answer any questions you have about long term disability insurance.  To schedule your free consultation, call Riemer Hess today at 212-297-0700 or select the button below.