A Puerto Rico court rules in favor of the claimant and finds that denial of her STD benefits made her ineligible for LTD benefits, thereby exhausting her administrative remedies for LTD benefits.

We have recently seen an influx in cases against Sedgwick and the Walgreen’s Income Protection Plan for Pharmacists, whereby Pharmacists are being unfairly denied short term and long term disability benefits. Not only are their benefits being wrongly denied, but Sedgwick and Walgreens are manipulating the vague and general language of the Plan provisions, in an attempt to free themselves of any liability to the hardworking Pharmacists who are entitled to disability benefits.

Background of the claim for benefits and ERISA lawsuit

The claimant, Ms. A, worked for Walgreens Puerto Rico as a staff Pharmacist. After being diagnosed with fibromyalgia and severe depression, she filed a claim for short term disability benefits. As is common with Sedgwick, Ms. A’s initial application for benefits was denied. Ms. A submitted medical records to support her disability and then her short term disability benefits were approved for a 3-week period. Ms. A then submitted additional records and requested an extension of her benefits. Ms. A’s request for continued benefits was denied and she filed her first-level appeal. Sedgwick denied the first-level appeal and informed Ms. A of her right to a second-level appeal. Ultimately, Ms. A’s second-level appeal was also denied. Ms. A filed her ERISA lawsuit initially against only Sedgwick, as they were the "claim administrator" who made the decision to deny Ms. A’s short term disability benefits. Sedgwick filed a Motion to Dismiss which alleged that Ms. A failed to identify Sedgwick as the "plan administrator", in attempt to free themselves of any liability to Ms. A for denying her claim for benefits. Ms. A amended her complaint and added Walgreen’s, alleging that either Sedgwick or Walgreen’s was the "plan administrator". Sedgwick then filed a motion for judgment claiming that Ms. A’s claim for long term disability benefits should be dismissed because she failed to exhaust her administrative remedies for those benefits.

Exhaustion of Administrative Remedies as requested by ERISA

It is well established by the courts that ERISA requires a claimant to first exhaust all available administrative remedies before filing a lawsuit under ERISA to recover disability benefits that were wrongfully denied. This means that first you must apply for disability benefits and if the benefits are denied, you must file an administrative appeal. If your appeal is denied and your Plan states that you only need file one appeal, then you can proceed to file an ERISA lawsuit. If your Plan requires a second-level appeal, you would need to file the second appeal and if denied again, you are then entitled to file a lawsuit; your administrative remedies are exhausted. Sedgwick is one of the few companies that requires two appeals. However, there exist a few exceptional circumstances whereby the Courts may determine, at their own discretion, that exhausting the administrative remedies would be futile for the claimant. This is called the futility exception. In order to qualify for this exception, the claimant must demonstrate by factual evidence that exhausting the administrative remedies would, in fact, be futile.

The plain language of the Walgreen’s Income Protection Plan for Pharmacists provides that denial of STD benefits renders the claimant ineligible for LTD benefits

To demonstrate that there existed factual evidence which entitled Ms. A to the futility exception with regards to her claim for long term disability benefits, Ms. A directed the Court to the Plan itself. The Walgreen’s Income Protection Plan for Pharmacists states that in order for an employee to become eligible for long term disability benefits, he or she must first accumulate 180 days of short term disability benefits. Ms. A argued that once her claim for short term disability benefits was denied, and after the denial of both her first-level and second-level appeals, she was not and could not become eligible for long term disability benefits. Moreover, it did not make sense for Ms. A to apply for long term disability benefits when she was, by definition, not eligible.

The Court found that for Ms. A to bring an administrative claim for long term disability benefits would be futile because she had already been denied short term disability benefit and was, according to the Plan, ineligible for long term disability benefits. Accordingly, Sedgwick’s motion for judgment, which was based on Ms. A’s failure to plead that she exhausted administrative remedies for LTD benefits, was denied. This is an important ruling for claimants that are fighting with Sedgwick and Walgreen’s because we have seen, and have even handled, cases where Sedgwick/Walgreen’s made this very argument. Rather than admit to the claim procedure that the Plan spells out, Sedgwick and Walgreen’s manipulate the Plan language to make the disability claim process absolutely daunting for claimants who are already dealing with incapacitating illness and the financial burden of not being able to work.

Sedgwick and Walgreen’s would have the claimants jumping through hoops, being denied short term disability benefits, having to file 2 separate appeals, and then filing an ERISA lawsuit. That process could take up to 2 years, or longer. Then Sedgwick and Walgreen’s argue that, if the claimant is then awarded the STD benefits, they should then start the entire process over again for LTD benefits, with applying, being denied, filing 2 appeals and then filing a lawsuit. This wastes everyone’s time, including the courts, and costs claimants and courts the added expense of costly litigation, just so Sedgwick and Walgreen’s can turn a profit at the expense of their own hard-working employees.

Attorneys Dell & Schaefer did not represent Ms. A in her disability claim, appeals or lawsuit. If you have questions regarding your claim for disability benefits, or if your disability claim has been denied by Sedgwick, Walgreen’s or any other disability insurance company, feel free to call Disability Attorneys Dell & Schaefer for a free consultation.