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Jordan v. Reliance Standard Life Insurance Co.

United States District Court, E.D. Tennessee, Chattanooga Division

January 24, 2018

BETH NICHOLE JORDAN, Plaintiff,
v.
RELIANCE STANDARD LIFE INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION

          Thomas W. Phillips, United States District Judge

         This matter is before the Court on Plaintiff's Motion for Judgment on the Pleadings [doc. 50], Plaintiff's Brief in Support of the Motion [doc. 54], Defendant's Response and Cross-Motion for Judgment on the Pleadings [doc. 65], Defendant's Brief in Support of the Cross-Motion [doc. 66], Plaintiff's Reply [doc. 78], Defendant's Sur-Reply [doc. 84], and Plaintiff's Response to Defendant's Sur-Reply [doc. 85]. For the reasons herein, the Court will deny both motions and will remand this action based on Defendant's contention that Plaintiff has failed to exhaust her administrative remedies.

         I.Background

         Between 2008 and 2009, Plaintiff Beth Nichole Jordan, a nurse anesthetist, suffered a possible tick bite while camping, contracted Lyme disease, and began to experience various medical complications from the disease. [Compl., doc. 1, ¶¶ 8, 12-13; R. at 312, 709-10, 854-56, 1428-31]. She eventually filed for disability benefits under her employer's long-term disability policy, whose administrator is Defendant Reliance Standard Life Insurance Company (“Reliance”). [Compl. ¶¶ 9-11, 14-15; see R. at 317- 22]. Reliance concluded that she qualified for long-term disability benefits under its policy, approved her claim, and provided her with benefits. [Compl. ¶ 16; R. at 303, 1606]. But a few years later, in 2015, Reliance terminated her benefits after finding that she did not meet the policy's definition of “Total Disability.” [Compl. ¶¶ 22-23; R. at 9, 1606-10].

         Ms. Jordan appealed Reliance's denial of her benefits on November 3, 2015, through Reliance's internal appellate-review process. [Compl. ¶ 24; R. at 1214]. While the appeal was ongoing, Reliance sent a letter to Ms. Jordan on December 16, 2015, informing her that it would require her to undergo an independent medical examination, [Compl. ¶ 27; R. at 1621]-which it is free to do under the policy's terms, [R. at 13]- and that it would “toll the statutory time frames for rendering an appeal determination pending completion of the examination and receipt of the physician's report, ” [id. at 1622; see Compl. ¶ 37]. Reliance's third-party vendor scheduled the exam to take place on January 12, 2016, with Stephen Dawkins, M.D., in Georgia. [Compl. ¶¶ 27-28; R. at 1335]. On the day of the exam, while Ms. Jordan was traveling to Dr. Dawkins' office, Dr. Dawkins had to respond to an emergency. [Compl. ¶ 29; R. at 237]. Although he could not keep his appointment with Ms. Jordan at the time that they had originally scheduled, he did offer to see her later in the afternoon on that same day. [Compl. ¶ 29; R. at 237]. She was unable, however, to meet with him on that day. [Compl. ¶ 30; R. at 237].

         On January 29, 2016, Reliance contacted Ms. Jordan's counsel about rescheduling the appointment. [Compl. ¶ 31; R. at 237]. According to Ms. Jordan, the due date for a decision on her appeal was December 18, 2015, [Compl. ¶ 35; R. at 243], and her counsel informed Reliance that she was willing to attend the exam only if Reliance could reschedule it “quickly, ” [Compl. ¶ 31; R. at 243]. The earliest available date for another appointment with Dr. Dawkins, however, was apparently February 24, 2016. [Compl. ¶ 32; R. at 243, 1628].[1]

         On February 5, 2016, Ms. Jordan, without having received a final decision from Reliance regarding her appeal, filed suit in this Court under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), claiming that Reliance wrongfully denied her disability benefits under the policy and seeking a judgment entitling her to those benefits. [Compl. at 7-8].[2] She alleges that “this matter is now properly before this court for judicial review.” [Id. ¶ 2]. Specifically, she maintains that “[b]ecause Reliance Standard has failed to follow the decision timeline required by the ERISA claims regulations . . . Plaintiff's administrative remedies are deemed exhausted[.]” [Id. ¶ 41]. In response, Reliance alleges that “Plaintiff's claim is barred by her failure to exhaust her administrative remedies.” [Answer, doc. 5, at 4].

         II.ERISA's Claims Procedure

         ERISA permits a participant[3] of certain employee benefit plans to file a civil action in federal district court for the recovery of benefits under these plans. 29 U.S.C. § 1132(a)(1)(B), (e)(1); see also Id. §§ 1002(1), 1003(a)-(b) (defining the types of plans to which ERISA applies). ERISA, however, “requires a participant to exhaust his or her administrative remedies prior to commencing suit in federal court.” Miller v. Metro. Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991). Although ERISA itself does not expressly require exhaustion, the Sixth Circuit espouses a judicially created doctrine of exhaustion based on “[t]he administrative scheme of ERISA.” Constantino v. TRW, Inc., 13 F.3d 969, 974 (6th Cir. 1994) (quoting id.).[4] A participant can therefore file suit to recover benefits under ERISA only after receiving a plan administrator's final decision as to that participant's entitlement to benefits. See Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S.Ct. 604, 610 (2013) (“A participant's cause of action under ERISA accordingly does not accrue until the plan issues a final denial.”).

         A participant, however, may also file suit before receiving a final decision if that decision is untimely under 29 C.F.R. § 2560.503-1(l)(2)(i). Under this regulation, [5] which is known as the “deemed-exhausted provision, ” a court must construe the administrator's untimeliness as a denial of benefits and deem the participant's administrative remedies to be exhausted. 29 C.F.R. § 2560.503-1(i)(1)(i), (i)(3)(i), (l)(2)(i). For a claim of disability benefits, the administrator's final decision as whether to uphold an initial denial of benefits is untimely if it does not take place within forty-five days of the participant's request for a review, id. § 2560.503-1(i)(1)(i), (i)(3)(i)-unless the administrator provides the participant with written notice of “special circumstances” that require an extension of time, id.§ 2560.503-1(i)(1)(i).[6] An extension of time due to special circumstances cannot exceed an additional forty-five days, meaning that the administrator must render a final decision no later than ninety days from the participant's request for a review. Id. § 2560.503-1(i)(1)(i), (i)(3)(i).

         III. Analysis

         The Court begins by noting that the exhaustion of administrative remedies applies only to plan-based claims under ERISA; it is not an antecedent to a participant's right to bring a statutory violation of ERISA-like an alleged violation of ERISA's anti-cutback provisions under 29 U.S.C. § 1054(g) or an alleged violation of ERISA's fiduciary duties under 29 U.S.C. § 1104. Hitchcock v. Cumberland Univ. 403(b) DC Plan, 851 F.3d 552, 564 (6th Cir. 2017). Ms. Jordan, however, does not allege a breach of fiduciary duty or any other statutory violation of ERISA, asserting only a claim for the wrongful denial of benefits under the terms of Reliance's policy. [See Compl. ¶¶ 46-53].[7] Her satisfaction of the common-law doctrine of exhaustion is therefore a prerequisite to her right to maintain this action. Also, Reliance incorporated the common-law exhaustion requirement into its policy, which states that “ERISA claim appeal remedies . . . must be exhausted” before a participant can pursue review in another forum[8] and provides that all reviews of claims must be “complete.” [R. at 13]; see Union Sec. Ins. Co. v. Blakeley, 636 F.3d 275, 276 (6th Cir. 2011) (stating that ERISA “repeatedly underscores the primacy of the written plan”).[9] So under both the common law and Reliance's policy, Ms. Jordan had to exhaust her administrative remedies before filing this action-and she acknowledges as much by pleading that she has “exhausted her required administrative remedies with respect to the long term disability claim.” [Compl. ¶ 42 (emphasis added)].

         Again, although she did not secure a final decision from Reliance by pursuing its internal appellate-review process to its end, she nonetheless argues that she has exhausted her administrative remedies and properly filed suit in this Court because Reliance never issued a timely final decision under the applicable deadline. [Id. ¶¶ 2, 35, 39; Pl.'s Br. at 20, 22-25]. She claims that because Reliance made no decision within forty-five days of her appeal, she did not have to wait for a decision. [Id.]. She also asserts that Reliance's letter from December 16, 2015-in which Reliance notified her of its intent to schedule an independent exam-does not constitute written notice of special circumstances and that Reliance was therefore not entitled to an additional forty-five-day extension based on this letter. [Compl. ¶ 36; Pl.'s Br. at 24-25]. In sum, she urges the Court to view her administrative remedies as exhausted under the deemed-exhausted provision.

         But before delving into the issue of exhaustion, the Court must define the legal parameters for its analysis. Although courts have resolved ERISA cases through summary judgment and bench trials, the Sixth Circuit, in a concurring opinion, has advised courts not to use either procedure in these types of cases. See Wilkins v. Baptist Sys., Inc., 150 F.3d 609, 617-19 (6th Cir. 1998) (Gilman, J., concurring). Considering only the evidence that the parties presented to the administrator, courts should instead review the administrative record and, based on that review, issue findings of fact and conclusions of law. Id. at 619. But as to the specific issue of exhaustion, Reliance- importantly-does not ask for judgment on the administrative record; instead, it requests the dismissal of Ms. Jordan's claim: “Plaintiff . . . failed to exhaust her administrative remedies ...


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