Key Points

  • Fourth Circuit holds that an untimely ERISA internal-appeal decision is not a valid exercise of fiduciary discretion, stripping the administrator of Firestone deference even though the plan conferred discretionary authority
  • Submission of new medical records and need for independent physician review do not qualify as 'special circumstances' justifying a 45-day extension because they are routine features of the appeals process
  • Court rejects a 'substantial compliance' defense for late appeal decisions, following the Seventh Circuit's Fessenden reasoning that late-breaking decisions cannot retroactively restore deferential review
  • Panel rejects a Loper Bright challenge to DOL's claims-procedure regulations, finding its de novo-review holding rests on Firestone and trust-law principles rather than the regulation itself

The Fourth Circuit has given ERISA disability claimants a sharper tool for challenging plan administrators who blow through appeal deadlines, ruling that a late decision on an internal appeal forfeits the deferential review administrators typically enjoy under Firestone Tire & Rubber Co. v. Bruch.

The court, in an opinion by Judge Agee joined by Judges Quattlebaum and Floyd, affirmed a judgment for Heather Cogdell against Reliance Standard Life Insurance Company, upholding a district court award of $210,769.49 in past-due long-term disability benefits plus $22,544.95 in prejudgment interest.

Cogdell, a former MITRE Corporation engineer, sought long-term disability benefits after long-COVID symptoms left her unable to work. Reliance denied her claim, and Cogdell filed a timely internal appeal on August 15, 2023. Under the applicable regulations and the plan itself, Reliance had 45 days—until October 1—to decide that appeal, extendable by another 45 days only if 'special circumstances' justified more time.

Reliance did not decide the appeal until October 26, seventy-two days after Cogdell filed it. The company argued it had validly invoked the 45-day extension in a September 25 letter citing the need for an 'independent physician review.' The court rejected that argument, explaining that a circumstance is 'special' only if 'it does not regularly arise in an internal appeal from the denial of benefits,' and finding that submitting new medical records and obtaining an independent medical review are contemplated as routine parts of the appeals process, not unusual events.

The court's timeline analysis undercut Reliance's position further. Records showed a Reliance nurse had already reviewed Cogdell's new submissions and recommended an independent evaluation within eight days of the appeal being filed—but the file then sat idle for 27 days before being referred to the appeals department. An internal Reliance note attributed the need for an extension to 'late appeal referral.'

Having found the appeal untimely, the court turned to the consequences for judicial review. Reliance argued that even a late decision should still receive deferential abuse-of-discretion review because it ultimately did decide the appeal, just 25 days behind schedule. The Fourth Circuit disagreed, holding that Firestone's deference framework requires both that the plan confer discretion and that the administrator actually exercise it within the boundaries set by the plan and its governing regulations.

'Decisions made outside the boundaries of conferred discretion are not exercises of discretion.'

The court explained that a plan administrator's compliance with rules conditioning the exercise of its discretion is fundamentally different from compliance with rules about the substantive exercise of that discretion. It rejected Reliance's invitation to apply a 'substantial compliance' doctrine to excuse the delay, adopting reasoning from the Seventh Circuit's Fessenden decision that permitting late-breaking decisions to retain deferential review 'would leave such a claimant in an uncertain position'—unsure whether to sue immediately after a deemed denial or wait for a tardy decision that might still arrive.

The court also rejected Reliance's argument, raised under Loper Bright Enterprises v. Raimondo, that the Department of Labor exceeded its rulemaking authority by specifying in its claims regulations that a deemed-denied claim is decided 'without the exercise of discretion by an appropriate fiduciary.' The panel found that its de novo-review holding rests on Firestone and trust-law principles independent of that regulatory provision, making the Loper Bright challenge beside the point.

On the merits, the panel found no error in the district court's de novo determination that Cogdell was totally disabled under the plan, rejecting Reliance's challenges to the court's characterization of her regular occupation, its exclusion of post-litigation medical reports from the administrative record, and its weighting of treating-physician opinions over paper reviews.

For disability-claim litigators, the ruling supplies a concrete forfeiture theory: administrators that miss internal-appeal deadlines—or invoke extensions without a genuine, documented special circumstance—risk losing Firestone deference altogether, exposing their benefits decisions to full de novo scrutiny in federal court.