Noblin v. Unum Life Ins Amer

Filing 24

MEMORANDUM OPINION AND ORDER dismissing Plaintiff's complaint. Signed by Honorable Jimm Larry Hendren on August 22, 2011. (adw)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
EVERETT D. NOBLIN

PLAINTIFF

v.

Case No. 03-5168

UNUM LIFE INSURANCE COMPANY
OF AMERICA

DEFENDANT

MEMORANDUM OPINION AND ORDER
Now on this 22nd day of August, 2011, this case comes on for
consideration and decision. The Court, being well and sufficiently
advised, finds and orders as follows:
BACKGROUND
Plaintiff brought this action against Unum Life Insurance
Company of America (“Unum”) pursuant to the provisions of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., challenging Unum’s decision denying him
long-term disability benefits.
Plaintiff

worked

for

Franklin

Electric

Company,

(“Franklin Electric”) for approximately thirty years.

Inc.

Plaintiff

stopped working on November 12, 1999, due to abdominal pain,
fatigue and dehydration.

Plaintiff has a history of ulcerative

colitis.
Plaintiff applied for benefits under a long-term disability
policy issued by Unum to the policy holder, Franklin Electric (the
“Policy”).

Unum is the claims administrator of the plan.

1

Plaintiff submitted a claim for long-term disability benefits
that was received by Unum on April 21, 2000.
Unum notified

plaintiff

by

letter

that

On July 27, 2000,

it would

not

approve

benefits because it had determined that there was no objective
medical evidence to support plaintiff’s claim that he was disabled
as defined by the Policy.

Unum advised plaintiff that he had 90

days to appeal the decision to deny benefits.
On February 22, 2011, plaintiff’s attorney forwarded medical
records and requested that Unum “consider [its] previous denial of
benefits on this claim.”
On April 13, 2001, Unum denied the request as untimely and
upheld its earlier denial of benefits.

Plaintiff made additional

requests for reconsideration, however, Unum denied plaintiff’s
requests as untimely and upheld its original decision to deny
benefits.
Plaintiff filed this case on July 28, 2003, and thereafter the
parties submitted the administrative record and filed briefs.

On

March 21, 2005, the parties filed a Stipulation for Stay of
Litigation.

The reason for the stay was that Unum had agreed, as

part of a multi-state settlement with insurance regulators, to
conduct reassessments of certain claims that had been denied.
Plaintiff chose to participate in this reassessment process and
asked the Court to stay this case pending the outcome of the
reassessment of his claim.

2

Thus, pursuant to the parties’ stipulation, the Court entered
a stay of this action and administratively terminated this case on
March 25, 2005.
As part of the reassessment process, Unum reviewed plaintiff’s
original claim as well as additional information received with the
reassessment.

In a letter dated February 8, 2007, Unum advised

plaintiff that it had determined that its original decision to deny
plaintiff’s claim was appropriate.
On March 26, 2009, plaintiff filed a motion to reopen the case
and, on April 15, 2009, the Court granted the motion and reopened
the case.

Thereafter,

the

parties

filed

supplements

to

administrative record and filed their supplemental briefs.

the
The

Court has reviewed the parties briefs and supplemental briefs as
well as the administrative record filed in this case.

This matter

is ripe for the Court’s decision.
Discussion
1.
Unum

Timeliness of plaintiff’s lawsuit
asserts

that

this

lawsuit

was

filed

outside

the

contractual limitations set out in the Policy and, thus, the case
should be dismissed as untimely.

Specifically, under

the Policy,

a claimant or the claimant’s authorized representative cannot start
any legal action “more than three years after the time proof of
claim is required.”

A proof of claim must be provided to Unum “no

later than 90 days after the end of the elimination period.”
3

Pursuant to the Policy, the elimination period is 180 days;
thus, the elimination period was from November 12, 1999, through
May 10, 2000.

Therefore, under the Policy, plaintiff was required

to submit his proof of claim no later than August 8, 2000 (which is
90 days after the end of the elimination period).
plaintiff proof of claim on April 21, 2000.

Unum received

There is no question

that the proof of claim was submitted timely.
Plaintiff filed his lawsuit on July 28, 2003, which was within
three years after the time his proof of claim was required.
Therefore, plaintiff’s lawsuit was timely filed.
Exhaustion of administrative remedies

2.

Second, Unum asserts that plaintiff failed to timely appeal
the initial decision denying benefits and, thus, the case should be
dismissed

for

failure

to

exhaust

administrative

remedies.

Plaintiff argues that the Court should excuse the exhaustion
requirement in this case because compliance would be futile.
(a)

“In this circuit, benefit claimants must exhaust [the

benefits appeal] procedure before bringing claims for wrongful
denial

to

court.”

Midgett

v.

Wash.

Group

Int’l

Long

Term

Disability Plan, 561 F.3d 887, 898 (8th Cir. 2009) (quoting Galman
v. Prudential Ins. Co. of Am., 254 F.3d 768, 770 (8th Cir. 2001)));
see also Angevine v. Anheuser-Busch Cos. Pension Plan, 2011 U.S.
App. LEXIS 14989 at *5 (8th Cir. July 22, 2011)(citing Chorosevic
v. MetLife Choices, 600 F.3d 934, 941 (8th Cir. 2010)).
4

“Indeed,

where

a

claimant

fails

to

pursue

and

exhaust

administrative

remedies that are clearly required under a particular ERISA plan,
his claim

for relief is barred.

Midgett, 561 F.3d at 898.

(internal quotation marks, brackets and citation omitted).
This judicially created exhaustion requirement serves
many important purposes, including "giving claims
administrators an opportunity to correct errors,
promoting consistent treatment of claims, providing a
non-adversarial dispute resolution process, decreasing
the cost and time of claims resolution, assembling a fact
record that will assist the court if judicial review is
necessary, and minimizing the likelihood of frivolous
lawsuits.
Angevine, 2011 U.S. App. LEXIS 14989 at *5 (quoting Galman, 254
F.3d at 770).
Courts excuse the exhaustion requirement “only when pursuing
an

administrative

remedy

would

administrative remedy to pursue.”

be

futile

or

there

is

no

Angevine, 2011 U.S. LEXIS 14989

at *5 (citing Brown v. J.B,. Hunt Transp. Servs., Inc., 586 F.3d
1079, 1085 (8th Cir. 2009)).
“The futility exception is narrow – the plan participant must
show that it is certain that [his] claim will be denied on appeal,
not merely that [he] doubts that an appeal will result in a
different decision.” Brown, 586 F.3d at 1085 (internal quotation
marks and citations omitted).
However, if a claimant shows that the insurer failed to comply
with its obligation under 29 U.S.C. § 1133 to provide “a reasonable
opportunity . . .

for a full and fair review” of its decision,
5

then

he

may

be

excused

from

the

requirement

to

exhaust

administrative remedies.
(b)

Here, plaintiff argues three reasons why he should be

excepted from the exhaustion requirement.

First, plaintiff says

that Unum did not provide him with a “a reasonable opportunity . .
.

for a full and fair review.”

Second, although not properly

labeled as such, plaintiff argues that Unum should be estopped from
enforcing the exhaustion requirement. Third, plaintiff argues that
exhaustion of administrative remedies would be futile.

The Court

will now address each of these issues in turn.
(i)

Did Unum provide a reasonable opportunity for a
full and fair review?

On July 27, 2000, Unum sent plaintiff its initial letter
notifying him of the decision to deny benefits.

In the letter,

UNUM advised plaintiff as follows:
If you do not agree with our decision, you may have it
reviewed. Should you desire a review, you must send a
written request, within 90 days of the date of this
letter. . . .
* * *
If Unum does not receive the written request within 90
days of this letter, our claims decision will be final.
Plaintiff’s next communication to Unum was on February 22,
2001,

when

his

attorney

requested

6

that

Unum

“consider

[its]

previous denial of benefits on this claim.”

It is undisputed that

plaintiff did not appeal Unum’s decision within 90 days.1
On April 13, 2001, Unum notified plaintiff that “[y]our
present request for review is beyond this 90 day deadline. Because
of the untimeliness of your request, we cannot review your client’s
claim and must uphold the denial of benefits.”
Plaintiff asserts that the 90 day requirement is unreasonable.
To support his argument, plaintiff cites to Price v. Xerox Corp.,
445 F.3d 1054 (8th Cir. 2006) where the Eighth Circuit recognized
that a claimant must have at least 180 days to appeal an adverse
benefits decision as set forth in 29 C.F.R. § 2560-503-1(h)(3)(I).
As Unum points out, § 2560-503-1(h)(3)(I) by its own terms
only applies to claims filed on or after January 1, 2002.
C.F.R. § 2560-503-a(o)(1).

See 29

Thus, because plaintiff’s claim was

filed on April 21, 2000, the 180-day requirement did not apply to
plaintiff’s claim.
1

ERISA requires that every employee benefit plan
establish and maintain reasonable procedures governing claim
review procedures. See Kinkead v. Southwestern Bell Corp.
Sickness & Accident Disability, 111 F.3d 67, 70 (8th Cir. 1997).
“[A]ny plan claim review procedure that meets the requirements of
29 U.S.C. § 1133 and 29 C.F.R. § 2560-503-1(f) and (g) will
trigger the judicially imposed duty to exhaust that remedy.” Id.
at 70. Unum contends that plaintiff was obligated to appeal the
denial within 90 days, as set out in the initial denial letter.
The record does not, however, contain any plan document that sets
out a claim review procedure that requires a claimant appeal
within 90 days. Because plaintiff has not contested that the
plan had such a requirement, the Court assumes that such a
requirement did, in fact, exist.
7

Nevertheless, even if Unum was obligated to provide plaintiff
with 180 days to appeal, plaintiff did not appeal Unum’s initial
decision denying benefits until February 22, 2001, which was 210
days after the adverse benefits decision.
Thus, the Court finds that Unum did provide plaintiff with a
“a reasonable opportunity . . .

for a full and fair review.”

The

Court now turns to the question of whether plaintiff has proffered
sufficient facts to show that he should be excused from exhaustion
of that review process.
(ii) Is Unum estopped from arguing that plaintiff failed
to exhaust administrative remedies?
Plaintiff argues that he did not timely appeal Unum’s decision
to deny benefits because he relied on a representation that he had
to apply for and receive Social Security Disability benefits in
order to be eligible for long-term disability benefits under
Franklin Electric’s plan. Although plaintiff couches this argument
as an issue of futility, this is an estoppel argument.

Because the

Court must take care to “refrain from focusing on the facial label
[plaintiff]

places

upon

[his]

argument

while

ignoring

its

substance,” the Court will consider whether Unum is estopped from
asserting the defense of exhaustion.

Brown, 586 F.3d at 1085.

“The principle of estoppel declares that a party who makes a
representation that misleads another person, who then reasonably
relies on that representation to his detriment, may not deny that
representation.”

Chorosevic, 600 F.3d at 942 (internal quotation
8

marks and citation omitted).

The Eighth Circuit has indicated

that an estoppel argument can preclude the affirmative defense of
failure to exhaust when the claimant relies to his detriment on
written misrepresentations by the insurer or plan administrator.
See Chorosevic, 600 F.3d at 944 (citing cases).
Here, plaintiff points to a December 8, 1999, letter from Bill
Lamphear, Employee Relations Supervisor for Franklin Electric, in
which Mr. Lamphear states the following:
This letter confirms the discussion we had last week over
the phone regarding your long-term disability benefit
from Franklin.
As I mentioned during our last
conversation, you must apply for, and receive Social
Security Disability benefits in order to be eligible for
Franklin’s plan.
The

problem

with

plaintiff’s

argument

is

that

this

representation did not come from Unum.

The representation came

from

no

Franklin

Electric

and

there

is

evidence

that

authorized the statement or even knew about it at the time.

Unum
Thus,

plaintiff cannot use the doctrine of estoppel to bar Unum from
asserting the defense of failure to exhaust when there is no
evidence that Unum made any misrepresentation to plaintiff.
Further, in order for the principle of estoppel to apply, the
reliance has to be reasonable. Plaintiff says that he received the
above letter from Franklin Electric on or about December 8, 1999.
However, plaintiff went ahead and applied for long-term benefits
(even though he had not received Social Security benefits yet).
Thus, it appears from plaintiff’s action in making a claim for
9

long-term benefits with Unum that he did not believe that he had to
receive Social Security Disability benefits in order to be eligible
for Franklin Electric’s plan.
Further, plaintiff was advised by Unum in its July 27, 2000,
letter that his claim was being denied for lack of medical support
–- not because he had not yet received Social Security disability
benefits.

Finally, Unum advised plaintiff that he had 90 days to

appeal the decision.

Based on these facts, the Court finds that

plaintiff cannot show that his reliance on the December 8, 1999,
letter from Franklin Electric as a reason to not appeal Unum’s
decision was reasonable. Therefore, the Court finds that estoppel
does not preclude Unum from asserting the defense of failure to
exhaust administrative remedies.
(iii) Did plaintiff show that pursuing the appeals
process would have been futile?
Plaintiff argues that he “pursued every administrative remedy
available to him.”

The Court disagrees.

the appeals process.

Plaintiff did not pursue

Although plaintiff attempted to appeal, his

requests were untimely.
Plaintiff further argues that pursuing his administrative
remedies

would

have

been

futile.

As

evidence

of

futility,

plaintiff points to the fact that Unum denied his claim when he
resubmitted it as part of the claims reassessment process.
plaintiff

argues

that,

because

his

10

claim

was

denied

Thus,
in

the

reassessment process, that denial shows that it would have been
futile for him to exhaust his administrative remedies.
Unum asserts that “futility is not established simply because
of reassessment.”

In support of its position, plaintiff cites to

Warner v. Unum Life Ins. Co. of Am., 2009 U.S. Dist. LEXIS 1009, at
*8-9 (E.D. Mo. Jan. 8, 2009).

In Warner, the plaintiff argued that

she had already been denied benefits and she did not see any reason
to believe that Unum would change its decision.

The court in

Warner noted that plaintiff had submitted a claim pursuant to the
reassessment process, but she had not properly pursued it because
she

had

not

requested.2

provided

Unum

with

the

additional

material

it

The court then held that:

[t]he details of Warner’s attempts to pursue her rights
under the settlement (or lack thereof) are immaterial,
however, because the real issue is futility. Warner has
failed to produce evidence of even a likelihood her
appeal would have been futile. As a result, I find that
Warner has not excused her failure to exhaust her
administrative remedies under the Unum policy.
Warner, 2009 U.S. Dist. LEXIS 1009 at *10.
Warner is distinguishable from the present facts because there
is no evidence in the record that plaintiff failed to properly

2

The Court in Warner describes the claims reassessment
process as a program that was part of a regulatory settlement
agreement that was reached by Unum, the Department of Labor and
state insurance regulators. Although the parties have not
provided the Court with any information about the claims
reassessment process in which plaintiff participated, the Court
assumes that it was the same or similar to the one referenced in
Warner. Id., 2009 U.S. Dist. LEXIS 1009, at *5.
11

pursue the claims reassessment process.

The record shows that, in

this case, plaintiff provided additional information to Unum as
part of the reassessment process.

Thus, the outcome of the

reassessment process is some evidence that Unum would have denied
plaintiff’s claim had he timely appealed the denial of benefits.
Therefore, the decision in Warner does not provide the Court with
much guidance in this case.
The Court has found no Eighth Circuit decision directly on
point with what appear to be the facts of this case.

However, the

applicable law is clear on the proposition that plaintiff bears the
burden of proving that his case falls within the “narrow” exception
of futility.
Plaintiff has come forward with no evidence to show any
agreement

between

reassessment

process

the

parties

would

cure

that

participation

plaintiff’s

exhaust his administrative remedies.

prior

in

failure

the
to

Nor does he provide any

evidence to suggest that Unum’s appeal process was a sham with no
possibility that his claim might be honored.

Thus, although

plaintiff’s claim was denied on February 8, 2007 -- after the
reassessment process -- it does not necessarily follow that it was
“certain” his claim would have been denied if he had timely pursued
his appeal remedies in 2000 when his original claim was denied.
Thus, for the foregoing reasons, the Court finds that plaintiff has
failed to demonstrate futility. Because plaintiff failed to pursue
12

and exhaust his administrative remedies, his claim for relief is
barred.

See Midgett, 561 F.3d at 898.

IT IS THEREFORE ORDERED that, for the reasons stated above,
plaintiff’s complaint is DISMISSED.
IT IS SO ORDERED.

/S/JIMM LARRY HENDREN
JIMM LARRY HENDREN
UNITED STATES DISTRICT JUDGE

13