You know that a claimant must exhaust administrative remedies before filing a suit. But is an appeal “optional” when the denial letter says that claimant “may request a second level review”? NO.

And what’s with 502(a)(3) breach of fiduciary claims anyway? “‘[A] review of the [ERISA] legislative history confirms that Congress did not contemplate that [the] phrase [equitable relief] would include an award of money damages’.”

This new case addresses these issues: Benson v. Tiffany and Company SPD, 2021 WL 1864035 (S.D. N.Y. May 10, 2021)(Claims denied because: (1) Plaintiff failed to exhaust administrative remedies; (2) Plaintiff’s breach of fiduciary duty claim dismissed because the “alleged harms can be compensated by money damages and Plaintiff has not sought any equitable relief that would distinguish her 502(a)(3) claim from her 502(a)(1)(B) claim.”)

FACTS: Benson sought ERISA-governed dental benefits after a biking accident. The Plan stated she would be reimbursed “only [for those]… costs beyond what Medicare would have paid, whether or not [she] file[d] claims with Medicare[.]” Benson knew she had to file an appeal within 60 days of receiving the denial letter. Benson filed an appeal on the 66th day after denial of her claim.

DISTRICT COURT HELD:

  1. “[A] failure to exhaust ERISA administrative remedies is not jurisdictional, but is an affirmative defense.” Op. at 13.
  2. “A clamant may be excused from exhaustion where pursuing a claim through administrative means would be futile.” Op. at 14.
  3. Tiffany argued Benson failed to submit her First-Level Appeal or Second-Level Appeal…”within the time periods [60 days] required under the 2017 Plan.” Op. at 16.
  • The Court concluded Benson had adequate notice of the appeal timeline requirements. 60 day time limits for appeals are reasonable. Non-plan letters providing an explanation that appeal “must” be submitted in 60 days are sufficient to meet ERISA requirements. Op. at 21.
  • The Court concluded a denial letter stating “that Plaintiff ‘may request a second level review’ does not render exhaustion optional.” Op. 23, n. 17 (italics in original; underscore added).
  • The Court stated: “[W]here a plaintiff failed to timely pursue ‘available and open’ administrative remedies, courts have found that ‘the plaintiff cannot later claim futility based on her inability to pursue those remedies any longer.’” Op. at 24-25.
  • The Court rejected application of equitable tolling to extend the deadline for her Second-Level Appeal. “[E]quitable tolling is only appropriate in ‘rare and exceptional circumstances’ such as ‘where a plaintiff was unaware of his or her cause of action due to misleading conduct of the defendant, or where a plaintiff’s medical condition or mental impairment prevented her from proceeding in a timely fashion.” Op. at 28.
  • “[M]ere administrative inconvenience, without more, is insufficient to demonstrate that some ‘extraordinary circumstance stood in [Plaintiff’s] way’ and prevented timely filing.” Op. at 29.
  • Even though “there may have been missteps in UHC’s handling of Plaintiff’s claims and appeals,” Plaintiff must prove these missteps “were more than inefficiencies [and that] they were preventable.” Op. at 30.

4. The Court dismissed the breach of fiduciary duty claim, stating:

  • “[T]he law is clear that a 502(a)(3) claim cannot exist solely as a second route to the damages sought under 502(a)(1)(b).” Op. at 33.
  • “‘[A] review of the [ERISA] legislative history confirms that Congress did not contemplate that [the] phrase [equitable relief] would include an award of money damages’.” Op. at 33 (Emph. added).
  • “Plaintiff’s alleged harms can be compensated by money damages and Plaintiff has not sought any equitable relief that would distinguish her 502(a)(3) claim from her 502(a)(1)(B) claim.” Op. at 35.