The federal Ninth Circuit Court of Appeals has ruled that benefits plan administrators can be sued for failing to adequately advise employees of the terms of a mandatory arbitration procedure for appealing benefits decisions. Laboratory Corporation of America had a health plan with a 60-day time limit for requesting arbitration after an internal claim appeal was denied. James Chappel, whose wife works for a Laboratory Corporation center in the Central Valley, sued the company after he was denied coverage under the plan, claiming he was unaware of the time limit for requesting arbitration. The court said that Laboratory Corporation, as the plan administrator, should have notified Chappel of the arbitration clause and its required procedures along with the letter rejecting his appeal of the claim. The court said Chappel could sue Laboratory Corporation for breaching its fiduciary duty to him as a plan beneficiary.
Note that new regulations just released by the federal Department of Labor establish detailed new rules for health benefits claims and appeals.