Many an ERISA lawsuit filer has had her suit summarily tossed on the ground that she failed to pursue an available administrative remedy (i.e., an internal appeal) prior to resorting to litigation. It’s a powerful roach bomb-like defense, one that allows insurers and plan administrators to assert without a hint of guilt that they’re off the hook regardless of how blatantly wrong the subject benefit determination was, or how improperly they behaved during the claim review process.
On some level it’s fair to say that there’s nothing unique about that. After all, statutes of limitations (legislative pronouncements that place limits on how long one can wait before filing suit) have the potential to produce the same devastating results. Still, there’s an important difference between a statute of limitations and the administrative remedy exhaustion requirement. The former is invariably memorized in a statute, while the latter is not.
To be sure, ERISA is quite clear in mandating that claimants be given access to an internal review process that’s “full and fair.” But nowhere in the ERISA statute is it written that claimants must avail themselves of the opportunity under penalty that if they do not, the courthouse doors will forever be closed to them.
How, then, did we get here? How, if the ERISA statute is silent on the subject, are ERISA claimants met with an all but unassailable requirement of pre-suit administrative remedy exhaustion? Via that other incubator of rules and procedures that guide and control many aspects of life: the judiciary, no doubt acting out of a desire to reduce the number of claims that find their way into court.
And the fact that the requirement has the judiciary as its progenitor is the impetus behind a growing legion of jurists who, while not ready to cast the requirement aside, have nevertheless done little to disguise their distaste for it. Case in point: a decision handed down by the Sixth Circuit Court of Appeals on March 31, 2020. In it, the court deemed it insufficient for a denial/termination letter to describe the internal appeal process; for a court to enforce a requirement to pursue administrative remedies, both the appeal process in general, and its gatekeeper role in particular, must be described in clear terms in the plan itself. In other words, according to the Sixth Circuit, a litigant should not have her ERISA case dismissed for failing to exhaust where the plan fails to spell out the internal appeal process or to inform the claimant that her access to court hinges on her first taking a crack at it.
The lesson to be derived from all of this? Don’t give up just because you never filed an internal appeal and your time to do so has expired. Speak to a knowledgeable attorney who can help you discern what rights you retain.
Wallace v. Oakwood Healthcare, Inc. 954 F.3d 879 (6th Cir. 2020)