Sharon KINKEAD, Plaintiff-Appellant, v. SOUTHWESTERN BELL CORPORATION SICKNESS & ACCIDENT DISABILITY BENEFIT PLAN; Southwestern Bell Corp. Long Term Disability Plan for Salaried Employees; Southwestern Bell Corporation, Defendants-Appellees.
No. 96-2282
United States Court of Appeals, Eighth Circuit
April 9, 1997
Rehearing and Suggestion for Rehearing En Banc Denied May 14, 1997
111 F.3d 67
Submitted Dec. 9, 1996.
Accordingly, we affirm the judgment of the district court.
Gregory G. Fenlon, St. Louis, MO, argued, for plaintiff-appellant.
David C. Welsch, St. Louis, MO, argued, for defendants-appellees.
LOKEN, Circuit Judge.
Sharon Kinkead appeals the district court‘s1 dismissal of her ERISA benefit claims against Southwestern Bell Corporation (Bell) and two of its employee benefits plans. Agreeing that Kinkead‘s suit is barred by her failure to exhaust the plans’ contractual appeal procedures, we affirm.
Following a traffic accident, Kinkead applied for short-term disability benefits from the Bell plans in September 1989. On October 12, Bell terminated her employment. On December 18, the plans’ Benefit Committee notified Kinkead of its decision that she was not entitled to further benefits. Kinkead did not ask the Committee for further review of this denial, as permitted by the plans and invited by the claim denial notice. Instead, she sued Bell for retaliatory discharge in violation of § 510 of ERISA,
The district court granted defendants’ motion to dismiss on the ground that Kinkead failed to exhaust her contractual plan remedies. Kinkead appeals, arguing that defendants’ claim denial notice was inadequate and, in any event, the plans do not require exhaustion of the plan review procedures. Exhaustion is a threshold legal issue we review de novo. See, e.g., Conley v. Pitney Bowes, 34 F.3d 714 (8th Cir. 1994).
ERISA expressly provides that every employee benefit plan must “provide adequate notice in writing” of each claim denial, and “afford a reasonable opportunity ... for a full and fair review” of each denial.
Federal courts applying ERISA have uniformly concluded that benefit claimants must exhaust the review procedures mandated by
With these basic principles established, we turn to Kinkead‘s specific contentions on appeal.
1. The denial notice. Kinkead first argues that the Benefit Committee‘s claim denial letter failed to comply with the notice requirements set forth in the plans,
You have the right to request that your claim denial be reviewed and to review pertinent documents relating to the denial. If you wish your denial of claim for benefits to be reviewed, you or your authorized agent may submit a written request for review to [the Benefit Committee‘s Secretary]. A request for review must be submitted within sixty (60) days of your receipt of this letter. It is important that any additional information you would like to be considered at the time of review accompany your written request.
The Committee‘s letter adequately described the claim review process. It advised Kinkead she had a right to further review and to examine the Committee‘s file. It told her where and when to submit a request for review and whether she could submit additional information. Thus, this case is distinguishable from Conley, where the claim denial notice made no mention of an appeal process. Kinkead argues that she was entitled to a clear statement that she must exhaust this review procedure. But neither the statute, the Department‘s regulations, nor any prior case imposes such a notice requirement. Given the practical reasons favoring exhaustion, claimants with notice of an available review procedure should know that they must take advantage of that procedure if they wish to bring wrongful benefit denial claims to court.
Kinkead further argues that the Committee‘s denial letter failed to provide a sufficiently detailed analysis of the reasons for denying her claim, as we required in Brumm v. Bert Bell NFL Retirement Plan, 995 F.2d 1433, 1436-37 (8th Cir. 1993); Cox v. Mid-America Dairymen, Inc., 965 F.2d 569, 573-74 (8th Cir. 1992); and Richardson v. Central States, S.E. & S.W. Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981). But in these cases, we were reviewing, on the merits, final claim denial letters that did not provide an adequate explanation of the plan administrator‘s discretionary decision. See Collins v. Central States, S.E. & S.W. Areas Health & Welfare Fund, 18 F.3d 556, 561 (8th Cir. 1994) (final denial notice adequate if it “permit[s] claimant] to challenge the denial in federal court and for us to review it“). Here, on the other hand, we deal with an initial claim denial notice. At this early stage of the claim process, administrative efficiency is a virtue, so long as disappointed claimants are advised of their right to pursue the plan‘s review procedures. Therefore, the initial claim denial need not be extensive, provided that it explains the basis for the adverse initial decision sufficiently to permit the claimant to prepare an informed request for further review.
In this case, the Committee‘s letter notified Kinkead that her claim was denied “because medical evidence does not substantiate you were disabled.” The letter told her what medical reports the Committee had considered and advised her that she could review these documents and submit additional information with her request for further review. The letter was sufficient to trigger an appeal process that Kinkead was required to exhaust.
2. The Plans’ Exhaustion Requirement. Kinkead next argues that the Bell plans create an optional review procedure, not a procedure that claimants must exhaust. The district court‘s opinion expressly states that Kinkead did not raise this issue in opposing defendants’ motion to dismiss. In her reply brief to this court, Kinkead asserts that the district court overlooked her “response to defendants’ reply in support of motion to dismiss,” a pleading she did not include in the record on appeal. We conclude that this issue is not properly preserved.
The judgment of the district court is affirmed. Appellees’ motion for costs and attorney‘s fees is denied.
KYLE, District Judge, dissenting.
I respectfully dissent from the majority‘s conclusion that the plans were not required to advise Kinkead that, after being notified that her application for benefits had been denied, she must exhaust their appeal procedures before filing suit in federal court.4
The Court writes that “neither the statute, the Department‘s regulations, nor any prior case imposes such a notice requirement.” ERISA itself, however, does not contain any exhaustion requirement. The statute is silent on this issue; exhaustion is a judicially created requirement. See Conley v. Pitney Bowes, 34 F.3d 714, 716 (8th Cir. 1994).
The opinion states that: “[G]iven the practical reasons favoring exhaustion, claimants with notice of an available review procedure should know that they must take advantage of that procedure if they wish to bring wrongful benefit denial claims to court.” (Emphasis added). While there are practical reasons favoring exhaustion, it does not, in my view, follow that claimants should know that they must take advantage of those procedures if they wish to file a lawsuit to enforce their benefits. We are not necessarily dealing with sophisticated employees or lawyers specializing in ERISA claims. Requiring the plan to clearly advise a claimant of the consequences of not exhausting the administrative review process would not place a substantial burden on the plan administrators, but it would explain the adverse consequences to an uninformed claimant.
In summary, I believe that a plan should be required to clearly inform a claimant that its internal review procedures must be exhausted before, and as a condition of, seeking judicial relief. The plans under review here failed to so inform Kinkead. Accordingly, I would reverse the Order of the District Court and allow Kinkead to proceed with her ERISA benefit claims against Bell and its two plans.