When a life insurance, long-term disability, or other ERISA claim is denied upon the first review, it can be tempting to want to run to the courthouse and file a lawsuit. After all, the frustrated ERISA claimant’s degree of trust in the claim review process is at an all-time low. Sure, the denial letter refers to an appeal process, but what’s the point of worrying about that? Do insurance companies ever change their minds just because someone has filed an appeal?

The first and most important consideration is that the federal courts have decided the appeals process in ERISA claims is not optional. While not a part of the original language of ERISA, federal courts have come to see the benefit of the parties developing a fuller record for review and possibly solving their disputes before the cost of a lawsuit in money and time has been incurred. Therefore, if a claimant runs straight to the courthouse after the initial denial, the case is likely to be dismissed for failure to exhaust administrative remedies. If there isn’t time left to appeal by the time the case is dismissed, the door to review of the initial denial could be permanently closed.

Yes, with a fresh look from a new claims reviewer, insurance companies do occasionally change their minds during the appeal process. Over the years, The Pellegrin Firm has seen it happen many times. The most common reason is that additional medical evidence, both in the form of medical records and of medical opinion evidence, has convinced the appeal reviewer that the initial decision was wrong. Sometimes, medical opinion evidence comes from the claimant’s treating physician and sometimes it comes from a medical reviewer hired by the insurance company. Less often, an attorney or claimant points out a flaw in the initial reviewer’s application of the policy language to the insured’s or claimant’s situation.

Put simply, insurance companies are open to changing their minds before a lawsuit is filed, and the appeal process could be the last chance to get the full benefits promised by the ERISA plan without the stress and compromise of litigation. Even if a lawsuit is necessary, courts are going to want to see what evidence was submitted to the benefits administrator before a suit was filed. In most cases, courts review the reasonableness of the insurance company’s decision as opposed to reweighing the claim from scratch. Therefore, it is important to give the appeal process all the attention it deserves, even if a change in decision seems unlikely.