Schorsch v. Reliance Standard Life Insurance
693 F.3d 734
| 7th Cir. | 2012Background
- ERISA allows civil action to recover benefits and requires internal claim review procedures.
- Plaintiff Schorsch enrolled in a long-term disability plan administered by Reliance; United Conveyor was the plan sponsor/administrator, but Reliance administered benefits.
- Schorsch began benefits in 1993; after May 1998 Reliance applied a stricter total disability definition.
- Reliance terminated benefits in June 2006 based on Dr. Tuttle’s exam and other file information, including surveillance observations.
- Reliance failed to preserve the full administrative record; Schorsch did not timely request a review and never exhausted administrative remedies.
- Schorsch filed suit in state court; Reliance removed, and discovery showed gaps and inconsistencies in Reliance’s process and records.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exhaustion was proper given alleged procedure flaws | Schorsch asserts Reliance’s flawed notice and process denied meaningful review | Reliance contends exhaustion is still required and notices were adequate | Exhaustion required; district court did not err in enforcing it |
| Whether estoppel can excuse exhaustion | Schorsch seeks estoppel due to Reliance’s missteps | No reasonable reliance shown; missteps do not excuse no-review requirement | No estoppel; exhaustion not excused |
| Effect of notice content and potential misrepresentation on review rights | Notice allegedly misrepresented basis for termination | Misrepresentations insufficient to negate review rights absent demonstrated reliance | No material reliance shown; review rights available and not pursued |
| Impact of regulatory deadline and lost records on exhaustion | Different regulatory deadlines could have allowed more time to seek review | Schorsch never sought review; deadline issues moot | Deadline issues did not alter failure to exhaust; district court properly applied rule |
| Whether Reliance’s loss of administrative record defeats exhaustion defense | Loss impeded review process | Loss does not show entitlement to bypass exhaustion; process remained available | Exhaustion still applicable; loss of record not sufficient to excuse non-review |
Key Cases Cited
- Edwards v. Briggs & Stratton Ret. Plan, 639 F.3d 355 (7th Cir. 2011) (exhaustion required absent meaningful access or futility)
- Salus v. GTE Directories Serv. Corp., 104 F.3d 131 (7th Cir. 1997) (exhaustion prerequisite; limit on excuses)
- Schneider v. Sentry Group Long Term Disability Plan, 422 F.3d 621 (7th Cir. 2005) (notice deficiencies do not automatically excuse exhaustion)
- Robyns v. Reliance Standard Life Ins. Co., 130 F.3d 1231 (7th Cir. 1997) (informing of review rights; exhaustion required)
- Loyola Univ. of Chi. v. Humana Ins. Co., 996 F.2d 895 (7th Cir. 1993) (employer not agent of insurer for implied misrepresentation)
- Sur v. Glidden-Durkee, 681 F.2d 490 (7th Cir. 1982) (employer plan administrator labeling ERISA obligations)
- Kross v. W. Elec. Co., 701 F.2d 1238 (7th Cir. 1983) (purpose of ERISA administrative resolution)
- Metropolitan Life Ins. Co. v. Quilty, 92 F.2d 829 (7th Cir. 1937) (employer vs insurer distinction for plan administration)