You know that procedural irregularities in an appeal denial of a claim for ERISA-governed benefits can change the standard of review from arbitrary and capricious to de novo review.

But not all the time. The claimant should also “provide meaningful new evidence or raise significant new issues on administrative appeal.”

Here’s the case of  Messick v. McKesson Corporation, __ F.3d__, 2016 WL 624861  (10th Cir. February 17, 2016) [PDF].

FACTS: Messick sought ERISA-governed disability benefits. The ERISA Plan provided for discretionary review.   The Plan terms provided that the employee could appeal a claim denial through a “two-level administrative appeals process.”  Messick made a first-level appeal of the claim denial, but the appeal denial letter was misaddressed, and Messick never received it. He then filed suit.

DISTRICT COURT HELD: Applying an abuse of discretion standard, the appeal denial was affirmed.

10th CIRCUIT HELD: REVERSED AND REMANDED.

  1. A misaddressed appeal denial letter can be a procedural irregularity requiring remand when the plan establishes a two-level administrative appeals process. Op. at 4.
  2. “Not all procedural irregularities require de novo review.  Op. at 5.
  3. “[A] late ruling on an administrative appeal [will still be reviewed under an abuse of discretion standard] ‘if a claimant fails to provide meaningful new evidence or raise significant new issues on administrative appeal and the delay does not undermine the court’s confidence in the integrity of the administrator’s decision-making process.’” Op. at 5.
  4. ERISA does not require a second-level appeal. But “[b]ecause the STD Plan required a second-level appeal as a condition to filing suit, the administrative record is not complete until that second appeal is final.” Op. at 6, fn. 2.