Fessenden v. Reliance Standard Life Insurance Company, 3:15-cv-00370

Plaintiff Donald Fessenden applied for long-term disability (LTD) benefits under Oracle’s Plan administered by Reliance Standard Life Insurance Company and was denied; he appealed and sued after Reliance’s appeal decision was untimely under 29 C.F.R. §2560.503-1.
The Plan includes a discretionary clause granting Reliance authority to interpret the Plan and determine eligibility, which ordinarily triggers arbitrary-and-capricious review.
DOL regulations (2000) set strict timing/content rules for claims and provide that failure to follow them can excuse administrative exhaustion and affect judicial deference.
Plaintiff moved to have the court apply de novo review because Reliance missed the regulatory deadline (claim deemed denied); Reliance argued it substantially complied and urged deferential review.
The court considered Halo v. Yale (2d Cir. 2016), which rejected the “substantial compliance” doctrine under the 2000 DOL regs but allowed a narrow inadvertent-and-harmless exception if the plan otherwise complies with procedures.
The court found Plaintiff presented no evidence of prejudice from the delay, Reliance conducted a substantive review (six years of records, independent reviewer, detailed denial letter), and concluded Reliance substantially complied; thus arbitrary-and-capricious review applies.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Applicable standard of review for LTD denial	Fessenden: untimely appeals determination means claim is "deemed denied" under the regs → de novo review	Reliance: substantial compliance with procedures; discretionary clause entitles it to arbitrary-and-capricious review	Court: Denied de novo; applied arbitrary-and-capricious because Reliance substantially complied and Plaintiff showed no prejudice
Effect of DOL 2000 regs and Halo	Fessenden: Halo supports de novo where regs not followed	Reliance: Halo is out-of-circuit; Seventh Circuit precedent allows substantial compliance to preserve deferential review	Court: Considered Halo but followed Seventh Circuit approach; required evidence of prejudice which Plaintiff did not show
Burden to prove entitlement to deferential review	Fessenden: administrator should not retain discretion when regs ignored	Reliance: bears burden to show substantial compliance and harmless/inadvertent failure	Court: Reliance met its burden here by showing substantive review and lack of prejudice
Significance of delay length and reasons for delay	Fessenden: any untimeliness triggers de novo regardless of length	Reliance: short delay due to need for records and independent review; not excessive	Court: delay was not shown to have harmed Plaintiff; reasons acceptable; did not trigger de novo review

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (establishes de novo review absent plan discretionary clause)
Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (discusses abuse-of-discretion review when plan grants discretion to administrator)
Halo v. Yale Health Plan, Dir. of Benefits & Records Yale Univ., 819 F.3d 42 (2d Cir. 2016) (rejects broad substantial-compliance doctrine under 2000 DOL regs; allows narrow inadvertent-and-harmless exception)
Nichols v. Prudential Ins. Co. of Am., 406 F.3d 98 (2d Cir. 2005) (administrator bears burden to prove discretion justifies deferential review)
Rasenack ex rel. Tribolet v. AIG Life Ins. Co., 585 F.3d 1311 (10th Cir. 2009) (describes substantial-compliance doctrine elements)
Gilbertson v. Allied Signal, Inc., 328 F.3d 625 (10th Cir. 2003) (articulates substantial-compliance rationale under earlier regs)
Halpin v. W.W. Grainger, Inc., 962 F.2d 685 (7th Cir. 1992) (Seventh Circuit precedent applying substantial-compliance principles)
Edwards v. Briggs & Stratton Ret. Plan, 639 F.3d 355 (7th Cir. 2011) (recognizes substantial compliance can preserve deferential review when plan vests discretion)