Seventh Circuit Draws a Line: In ERISA Disability Appeals, a Fundamentally Inconsistent Onset Date Is a New Claim Requiring Exhaustion

Introduction

In Karen Moratz v. Reliance Standard Life Insurance Company (No. 24-2825, decided September 2, 2025), the Seventh Circuit addresses a recurring and practically significant issue under ERISA: when does additional information submitted on administrative appeal merely supplement a claim, and when does it amount to a new claim that must be filed and exhausted separately? The court holds that while ERISA’s claims-procedure regulations require plan fiduciaries to consider additional or corrected information on appeal, fiduciaries are not obligated to treat fundamentally inconsistent information—such as a wholesale reversal of the disability onset date and last day worked—as part of the same claim. Where the appeal materials present a “separate loss,” the submission constitutes a new claim, which must be presented to the plan and administratively exhausted before suit.

The case arises from the COVID-19 pandemic’s dislocations. Plaintiff-appellant Karen Moratz, principal flutist for the Indianapolis Symphony Orchestra (ISO), was furloughed in March 2020. She experienced COVID-19-related symptoms in December 2020 and claimed long-term disability (LTD) benefits under the ISO’s Reliance Standard policy. Reliance denied her claim because she was not an “active, Full-time employee” on the alleged onset date and thus was not in an eligible class. On appeal to the insurer, Moratz supplied new information that she had been rehired in September 2021 but was placed on sick leave two weeks later due to persistent dizziness and tinnitus. Reliance treated the appeal materials as a new claim and affirmed the denial. The district court granted summary judgment to Reliance; the Seventh Circuit affirmed.

Summary of the Judgment

Standard of review: De novo. Because Reliance did not timely decide the appeal, the court owed no deference to the administrator’s decision and independently determined entitlement to benefits.
Coverage at December 2020 onset: Not eligible. Under the policy, coverage applies only to “active, Full-time employee[s].” The undisputed record shows Moratz was furloughed and not active in December 2020, so she was not in the eligible class and had no LTD coverage for that onset date.
Appeal submissions changing onset date and last day worked: New claim. The court held that ERISA regulations require consideration of additional or corrected information on appeal, but not information that fundamentally contradicts the original claim. Changing the alleged loss from a December 2020 onset (while not working) to a September 2021 onset (after rehire) is a different “loss,” thus a different claim.
Administrative exhaustion: Required. Because the September 2021-based claim had not been filed and exhausted through the plan’s procedures, the court could not adjudicate entitlement to LTD benefits on that theory. No futility or other exception was established.
Holding: The district court’s judgment for Reliance affirmed. The December 2020 claim fails for ineligibility; the September 2021 claim must be filed and exhausted anew.

Background and Procedural Posture

The ISO furloughed its musicians in March 2020 due to the pandemic. In December 2020, Moratz experienced COVID-related symptoms, later diagnosed as vestibular migraines, with ongoing dizziness and tinnitus. The ISO rehired its musicians in September 2021. Moratz returned, but within two weeks was placed on sick leave because her symptoms impeded performance.

In February 2022, she applied for LTD benefits, listing:

Last day worked: March 13, 2020 (never returned to work)
First date unable to work full-time: December 11, 2020

Reliance denied the claim because she was not “active, Full-time” in December 2020. A pandemic-related 90-day extension of coverage had ended in June 2020; thus, there was no coverage on the stated onset date.

On appeal (August 2022), she submitted evidence she was rehired effective September 1, 2021, but could not perform and went on sick leave September 15, 2021. Reliance affirmed the denial and advised that, based on the new-hire date and changed facts, she could file a new LTD claim. The district court granted Reliance summary judgment. On appeal, both sides agreed de novo review applied due to the insurer’s late appeal decision.

The Court’s Analysis

1) Precedents and Authorities Cited

Diaz v. Prudential (7th Cir. 2007) and Santaella v. MetLife (7th Cir. 1997): Clarify de novo review in ERISA denial cases decided on summary judgment. De novo means the court independently determines entitlement, not that it defers to the administrator’s reasoning.
Fessenden v. Reliance Standard (7th Cir. 2019): If an administrator misses ERISA’s decision deadlines, courts owe no deference to its decision, triggering de novo review.
Dorris v. Unum (7th Cir. 2020) and Scanlon v. LINA (7th Cir. 2023): Reinforce that in de novo ERISA cases, the question is entitlement under the plan; what happened before the administrator is not controlling.
Tran v. Minnesota Life (7th Cir. 2019): Federal common law of contract governs ERISA plan interpretation; ambiguities are construed in favor of the insured.
ERISA regulations, 29 C.F.R. § 2560.503-1: Define a “claim for benefits” and set appeal procedures, including the requirement that, on review, plans consider all information submitted “relating to the claim.”
Howington v. Smurfit-Stone (S.D. Ala. 2012): A plan should not penalize scrivener’s errors; administrators have fiduciary duties to fully and fairly investigate where a claimant’s mistake is minor and the plan language makes certain dates determinative.
Schorsch v. Reliance Standard (7th Cir. 2012), Powell v. AT&T (7th Cir. 1991), and Salus v. GTE (7th Cir. 1997): Establish and explain ERISA’s administrative exhaustion requirement and its exceptions (futility or lack of meaningful access).
Circuit decisions on “active employee” ambiguity: Ministeri (1st Cir. 2022), Tester (4th Cir. 2000), Miller (5th Cir. 2021), Wallace (6th Cir. 2020), Carlile (10th Cir. 2021) hold that “active” in eligibility provisions can be ambiguous and construed against the insurer. The Seventh Circuit expressly did not resolve that ambiguity question here because, under any reasonable reading, the claimant was not active in December 2020.

2) The Court’s Legal Reasoning

a) Defining “claim” and “loss” by reference to the policy. The court looked to ERISA’s definition of “claim for benefits” as a request filed in accordance with the plan’s procedures and then to the policy’s claim provisions to understand what constitutes a “claim.” The policy requires:

Written notice of claim within 30 days of the onset of disability;
Written proof of claim describing the “occurrence, character and extent” of the “Total Disability” for which the claim is made;
Evaluation of “satisfactory proof of loss.”

Reading these together, the court reasoned that a “claim” is the insured’s request for coverage for a particular “loss,” namely, the inability to work starting on a specified onset date. Thus, changing the onset date from December 2020 (while furloughed) to September 2021 (after rehire) does not merely correct or supplement the same loss; it identifies a different loss, triggering a different claim.

b) Supplementation versus contradiction under ERISA’s appeal rule. ERISA regulations require an appeal to take into account all information “relating to the claim,” including additional evidence. The court emphasized that this obligation has limits: a plan need not treat fundamentally inconsistent facts as an amendment to the same claim. There is a practical and doctrinal line between supplementation (additional medical records, clarifying details, correcting minor errors) and contradiction (reversing the basic event and date that define the loss).

c) Practical coherence of claims processing. The court warned that “no claims processing system can work” if claimants can pivot to completely inconsistent factual foundations on appeal. Doing so would subvert the administratively coherent unit of review the plan must provide and would fold new, unexhausted claims into old ones, bypassing the plan’s initial decision-making.

d) Coverage at December 2020 onset. Applying ordinary-language interpretation principles, the court concluded that Moratz was not in the “Eligible Class” on the December 2020 onset date (she was furloughed and not an active employee). The temporary pandemic extension of coverage had ended in June 2020. Therefore, the December 2020 claim fails on the merits under the terms of the plan.

e) The September 2021 theory is a new, unexhausted claim. Because the appeal materials recast the loss to September 2021, when the employment and medical circumstances were materially different, that theory had to be presented as a new claim under the plan’s procedures. The court declined to adjudicate the merits of eligibility or disability as of September 2021 because ERISA requires exhaustion, and no futility or similar exception was shown.

3) Impact and Significance

This decision draws an administrable and precedentially important line in ERISA litigation:

Appeal scope clarified: On administrative appeal, claimants may submit additional or corrected information that relates to the same loss. But if the appeal materials change the core loss-defining facts (onset date, last day worked, period of claimed disability) such that the claim now targets a different period of loss or different eligibility status, that is a new claim.
Administrative exhaustion reinforced: Claimants must file and exhaust plan procedures for the new claim before suing. Courts will not adjudicate unexhausted theories framed as “appeal supplements.”
Practical guidance for pandemic-era claims: The ruling will be especially impactful for furlough and layoff scenarios where coverage depends on “active” employment status. Claimants who later return to work and then become disabled must file a new claim keyed to that later onset date, rather than attempting to retrofit the earlier claim on appeal.
Harmonization with ERISA’s framework: The holding respects ERISA’s design that plan fiduciaries, not courts, have primary responsibility for claims processing, incentivizing accurate initial filings and orderly review.
Open question preserved: The Seventh Circuit did not resolve whether “active, Full-time employee” in eligibility clauses is ambiguous—a question on which other circuits have construed ambiguity against insurers. That issue remains for a future case where it is outcome-determinative.

Complex Concepts Simplified

De novo review in ERISA cases: When a plan administrator’s decision is late or the plan does not grant discretionary authority, a court independently decides entitlement to benefits. The court does not defer to the plan’s decision; it asks whether, under the plan’s terms, the claimant has shown entitlement.
Administrative exhaustion: Before suing under ERISA to recover benefits, a claimant generally must pursue and complete the plan’s internal claim and appeal process for the claim at issue. Exceptions (like futility) are narrow and must be shown.
Claim versus appeal: A “claim” is a request for benefits for a particular loss (e.g., disability beginning on a specific date). An “appeal” is a challenge to the denial of that claim, where the claimant can add supporting materials. When the appeal changes the loss itself (for example, shifts the onset date to a different employment status), it becomes a new claim.
“Active, Full-time employee” eligibility: Many group policies only cover employees who are actively working full-time. If someone is furloughed or on unpaid leave, coverage for certain benefits (like LTD) may suspend. Some plans have exceptions or grace periods, but those are often time-limited.
Proof of loss: Policies require claimants to provide timely notice and proof describing the “occurrence, character, and extent” of disability. These details anchor the “loss” that the claim seeks to cover.

Practical Guidance

For Claimants and Counsel

Anchor the onset date carefully. The asserted disability onset date determines eligibility and coverage. If you were furloughed or otherwise not “active” on that date, you may not be in the eligible class. If your disability manifested after a return to active work, file a new claim tied to that later onset date.
Use appeals to supplement, not to pivot. On appeal, add medical reports, clarify details, and correct minor mistakes. Do not assume that a wholesale change to the onset date or last day worked will be treated as the same claim on appeal; instead, submit a new claim to avoid exhaustion problems.
Preserve deadlines. New claims will restart notice and proof-of-loss timelines, elimination periods, and other plan-specific deadlines. File promptly to avoid timeliness defenses.
Consider exceptions but do not rely on them. Courts rarely excuse exhaustion. To argue futility, build a factual record showing that the new claim would inevitably be denied on grounds that the plan has already definitively applied.
Mind the “active” ambiguity issue. In some circuits, “active” in eligibility clauses has been deemed ambiguous and construed against the insurer. In the Seventh Circuit, that question is still open where outcome-determinative; be prepared to brief it with comparative authority if relevant.

For Plan Administrators and Insurers

Make the line explicit in written communications. When appeal submissions introduce fundamentally inconsistent facts that redefine the loss, inform the claimant in writing that the materials constitute a new claim and provide the steps to file it.
Continue to accept true corrections. Where appeal submissions reasonably correct scrivener’s errors or add clarifying information about the same loss, consider them under 29 C.F.R. § 2560.503-1.
Train staff on “same loss versus new loss.” Consider internal checklists: Does the appeal change the onset date, last day worked, insured status, or elimination period in a way that materially alters the covered “loss”? If yes, treat as a new claim.
Preserve deference by meeting deadlines. Although this case applied de novo review due to late decision-making, timely decisions under plan terms preserve deferential review where available by plan language.

What the Court Did Not Decide

Whether “active, Full-time employee” in eligibility clauses is ambiguous under Seventh Circuit law. The court flagged contrary decisions from other circuits but found it unnecessary to decide here because the claimant was plainly not active on the December 2020 onset date.
Whether Moratz was disabled under the policy as of September 2021. The merits of the later-onset claim were not reached due to lack of administrative exhaustion.
The sufficiency of medical proof across the entire period. An independent physician review existed, but the outcome turned on eligibility and the claim/appeal demarcation, not on medical sufficiency.

A Practical Test: Is Appeal Material a “New Claim”?

Ask four questions:

Does the appeal change the alleged disability onset date or last day worked in a way that alters the insured’s eligibility status or benefit period?
Does it shift the elimination period or fundamentally change the time frame of alleged disability?
Does it rely on different employment-status facts (e.g., furlough versus active rehire)?
Does it present a different “loss” under the policy’s notice/proof-of-loss framework (the occurrence, character, and extent of disability)?

If the answer to any of these is yes in a material way, it is likely a new claim requiring filing and exhaustion. If the changes are minor corrections or added documentation about the same loss period, treat them as proper appeal supplementation.

Conclusion

The Seventh Circuit’s decision in Moratz v. Reliance Standard clarifies a crucial boundary in ERISA benefits litigation. Appeals are for supplementing or correcting the same claim; they are not vehicles for introducing a fundamentally different claim about a different loss period or different eligibility status. When claimants pivot to an inconsistent onset date and employment posture, they are presenting a new claim that must be filed and exhausted under the plan’s procedures before judicial review is available.

Practically, the decision promotes orderly and coherent claims processing and provides administrable guidance to both fiduciaries and claimants. Doctrinally, it harmonizes ERISA’s appeal regulations with the policy-defined concepts of “claim” and “loss.” While leaving open the broader ambiguity question regarding “active” eligibility language, the court offers a clear precedent on the appeal/new-claim divide that will shape future disability, life, and other ERISA benefit disputes—especially those arising from pandemic-era furloughs and post-rehire disabilities. The key takeaway: if the appeal changes the loss, file a new claim.