Murphy Med. Assocs., LLC v. 1199SEIU Nat'l Benefit Fund
24-1880
2d Cir.Mar 11, 2025Background
- Plaintiffs (Murphy Medical Associates, LLC, Diagnostic and Medical Specialists of Greenwich, LLC, and Dr. Steven A.R. Murphy) sought reimbursement from the 1199SEIU National Benefit Fund for COVID-19 tests and related services provided to Fund members.
- The Fund denied or partially reimbursed these claims.
- Plaintiffs filed suit under ERISA for the denied reimbursements, without first completing the Fund’s internal administrative appeals process.
- The Fund moved to dismiss for failure to exhaust administrative remedies, as required by the Fund's Summary Plan Descriptions (SPD).
- The district court dismissed the case with prejudice, finding that Plaintiffs failed to plausibly allege exhaustion or demonstrate that exhaustion would have been futile.
- Plaintiffs appealed the dismissal, arguing both that exhaustion was unnecessary or futile, and that their amended complaint contained sufficient allegations of futility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Need to Plead Exhaustion | Not required to plead exhaustion; it's defendant’s burden | Complaint shows non-exhaustion, so dismissal proper | Plaintiff must plausibly allege exhaustion or futility |
| Sufficiency of Alleged Exhaustion | Claimed to have appealed via correspondence | Mere correspondence doesn’t satisfy Plan's appeal process | Allegations inadequate; did not meet pleading burden |
| Futility Exception to Exhaustion | Exhaustion would have been futile due to inadequate info and blanket denials | No factual showing of futility; process was available | No facts showing futility; conclusory allegations insufficient |
| Standing of Provider to Appeal (ERISA) | Statutes make provider a claimant entitled to appeal and notice | Only members/authorized representatives can appeal | Provider can appeal only if authorized by member; no standing |
Key Cases Cited
- Kennedy v. Empire Blue Cross & Blue Shield, 989 F.2d 588 (2d Cir. 1993) (establishes exhaustion requirement and futility exception in ERISA cases)
- Paese v. Hartford Life & Acc. Ins., 449 F.3d 435 (2d Cir. 2006) (exhaustion is an affirmative defense in ERISA, but can be considered at pleadings stage if evident)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requiring non-conclusory factual allegations)
- Smith v. Blue Cross & Blue Shield United of Wis., 959 F.2d 655 (7th Cir. 1992) (distinguishes futility exception from cases where review is unavailable)