Coats v. Reliance Standard Life Insurance Company
Filing
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OPINION AND ORDER by Judge Terence Kern ; setting/resetting deadline(s)/hearing(s): ( Status Report due by 5/11/2017); denying 16 Motion for Discovery; granting 17 Motion for Partial Summary Judgment (srt, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
JENNIFER COATS,
Plaintiff,
v.
RELIANCE STANDARD LIFE
INSURANCE POLICY,
Defendant.
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) Case No. 16-CV-233-TCK-TLW
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OPINION AND ORDER
Before the Court is Plaintiff’s Motion for Partial Summary Judgment (Doc. 17).
I.
Factual Background
On April 2, 2012, Plaintiff Jennifer Coats became employed as a staff nurse with Cottage
Health Care (“Cottage”). Plaintiff became a participant in Cottage’s employee welfare benefit plan
(the “Plan”), which is governed by the Employee Retirement Income Security Act of 1974
(“ERISA”). The Plan includes long-term disability (“LTD”) benefits funded by Defendant Reliance
Standard Life Insurance Company (“Reliance”) through Group Policy No. LSC 97, 200. The Plan
provides that Reliance “shall serve as the claims review fiduciary with respect to the insurance policy
and the Plan”; shall “determine eligibility for benefits”; and shall make “complete, final and binding
decisions on all parties.” (AR 18.)
On October 19, 2013, Plaintiff suffered an on-the-job back injury and has not returned to
work since that time. Plaintiff submitted a claim for LTD benefits with Reliance on March 24, 2015.
By letter dated June 11, 2015, Reliance approved the claim and granted Plaintiff $2,194.96 in
monthly LTD benefits.
Believing the award was insufficient, Plaintiff filed an administrative appeal of the adverse
benefit determination on December 3, 2015. On January 25, 2016, outside the 45-day deadline in
the relevant ERISA regulation, Reliance sent a letter to Plaintiff stating:
We are required to make a decision within 45 days of the date of your appeal but are
allowed an additional 45 days if circumstances do not permit us to make a decision
within the initial 45 day time frame. Please allow this letter to serve as notice of our
intention to take beyond 45 days to make a final decision on your appeal. As we are
still in the process of completing our review, we will be contacting you in the near
future with an update or to inform you if additional information will be required.
(AR 187.)
On April 5, 2016, having heard nothing from Reliance regarding her LTD claim,1 Plaintiff
filed the instant case in Tulsa County, alleging underpayment of ERISA benefits and breach of
fiduciary duty. Plaintiff alleges that Reliance failed to adjudicate her appeal in accordance with the
Plan or applicable law, that the appeal was deemed denied and exhausted, and that her civil action
was permissible to recover underpaid amounts. Reliance received process in this case sometime
between April 8 and April 11, 2016. On April 20, 2016, Reliance denied the appeal. On April 27,
2016, Reliance removed the case to this Court, and the Court set a briefing schedule governing the
preliminary issue of the proper standard of review.
Currently before the Court is Plaintiff’s motion for partial summary judgment on the question
of the proper standard of review. Based on undisputed facts in the administrative record, Plaintiff
contends that Reliance resolved Plaintiff’s appeal outside of ERISA’s mandated deadlines.
According to Plaintiff, this violation negates the “arbitrary and capricious” standard normally applied
1
On March 1, 2016, Reliance inquired about Plaintiff’s Social Security Disability claim.
However, Plaintiff contends this was unrelated to her LTD claim, and Reliance has not attempted
to show otherwise.
2
and results in a de novo standard of review. Reliance does not dispute that its decision was untimely
but argues: (1) untimeliness is not a procedural irregularity that alters the standard of review; and,
alternatively, (2) a “substantial compliance” exception applies because Plaintiff “was not prejudiced
by the timing of the appeal decision.” (Resp. to Mot. for Partial Summ. J. 8.)
II.
Summary Judgment Standard
Summary judgment is proper only if “there is no genuine issue as to any material fact, and
the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The moving
party bears the burden of showing that no genuine issue of material fact exists. See Zamora v. Elite
Logistics, Inc., 449 F.3d 1106, 1112 (10th Cir. 2006). The Court resolves all factual disputes and
draws all reasonable inferences in favor of the non-moving party. Id. However, the party seeking
to overcome a motion for summary judgment may not “rest on mere allegations” in its complaint but
must “set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e).
The party seeking to overcome a motion for summary judgment must also make a showing sufficient
to establish the existence of those elements essential to that party’s case. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323-33 (1986).
III.
Analysis
A.
Does Untimeliness of Reliance’s Decision Alter the Standard of Review?
Because Reliance does not dispute that its decision was untimely, the first question presented
is purely legal – whether the untimeliness of its decision alters the arbitrary and capricious standard
of review. If a benefit plan gives the administrator discretionary authority to determine eligibility
for benefits or to construe the terms of the plan, such as the Plan at issue here, a court ordinarily
employs a deferential “arbitrary and capricious” standard of review. LaAsmar v. Phelps Dodge
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Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d 789, 796
(10th Cir. 2010) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Under
this standard, the denial of benefits must be affirmed if the administrator’s interpretation was
reasonable and made in good faith. Id.
However, an ERISA plan administrator is not entitled to the arbitrary and capricious standard
when there are “procedural irregularities in the administrator’s consideration of the benefits claim.”
LaAsmar, 605 F.3d at 797. Under clear and settled Tenth Circuit law, failure to comply with
ERISA’s regulatory time limits for deciding claims or appeals – as set forth in 29 C.F.R. § 2560503.1 – constitutes a “procedural irregularity” resulting in de novo review. Id. at 796 (“[T]here were
‘procedural irregularities’ here – MetLife’s failure to comply with ERISA-mandated time limits in
deciding the LaAsmars’ administrative appeal – that require us to apply the same de novo review that
would be required if discretion was not vested in MetLife.”). The Tenth Circuit has also made clear
that a procedural irregularity of untimeliness exists whether the administrator never issues a
decisions or merely issues an untimely decision. Id. at 798.
In 2009, the Tenth Circuit examined the 2002 amendments to the relevant ERISA regulations
and expressly affirmed the above-described rules:
[W]e are not persuaded by [the] argument that the 2002 amendments to ERISA
somehow abrogated the [prior] rule. The 2002 amendments replaced in part the
“deemed denied” provision – which permitted a claimant to file suit if the
administrator failed to respond to a claim within a certain prescribed period – with
the following paragraph:
In the case of the failure of a plan to establish or follow claims
procedures consistent with the requirements of this section, a
claimant shall be deemed to have exhausted the administrative
remedies available under the plan and shall be entitled to pursue any
available remedies under section 502(a) of the Act on the basis that
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the plan has failed to provide a reasonable claims procedure that
would yield a decision on the merits of the claim.
29 C.F.R. § 2560.503-1(k)(l) (2002). This change does not alter our conclusion that
when an administrator violates the statutory deadlines incorporated into the plan,
Firestone deference no longer applies.
Rasenack ex rel. Tolet v. AIG Life Ins. Co., 585 F.3d 1311, 1316 (10th Cir. 2009); see also LaAsmar,
605 F.3d at 796. It is therefore well-established Tenth Circuit law that, despite the 2002 regulatory
amendments changing “deemed denied” to “deemed to have exhausted,” an untimely decision by
a plan administrator constitutes a “procedural irregularity” requiring de novo review.
Reliance urges the Court to ignore Tenth Circuit decisions directly on point issued in 2009
and 2010, follow an unpublished Third Circuit decision, and hold that the 2002 amendments alter
the above-described scheme. The Court need not spend time explaining its rejection of Reliance’s
frivolous argument. The Court simply follows Tenth Circuit precedent, as it must, and holds that
untimeliness of an administrator’s claims decision alters the standard of review from arbitrary and
capricious to de novo.
B.
Has Reliance “Substantially Complied,” Such That De Novo Review Is Not
Warranted in This Case?
The Tenth Circuit has recognized a “substantial compliance” exception to cases involving
procedural irregularities. See Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 634 (10th Cir. 2003)
(noting that “courts have [] been willing to overlook administrators’ failure to meet certain
procedural requirements when the administrator has substantially complied with the regulations and
the process as a whole fulfills the broader purposes of ERISA and its accompanying regulations”).2
2
The Tenth Circuit has called the substantial compliance exception into question following
the 2002 amendments but has never overruled it. See LaAsmar, 605 F.3d at 800 & n.7 (“We need
not decide whether that ‘substantial compliance’ doctrine still applies to the revised regulation at
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In the context of untimeliness, a plan administrator is in substantial compliance with an ERISA
deadline if the delay is both: (1) inconsequential, and (2) in the context of an ongoing, good-faith
exchange of information between the administrator and the claimant. See Rasenack ex rel. Tribolet,
585 F.3d at 1317.
The Court finds that Reliance’s January 25, 2015 letter was insufficient to trigger additional
response time because it was itself outside the prescribed time period and failed to identify special
circumstances warranting an extension. See 29 C.F.R. § 2560-503.1(f)(1) (setting forth requirements
for extension notification). Reliance did not provide any argument or evidence disputing Plaintiff’s
assertion that the January 25 letter was insufficient, or otherwise address its compliance with the
relevant regulation. Thus, the Court concludes that Reliance’s decision on Plaintiff’s December 3,
2015 appeal was due within 45 days, or on January 10, 2015. See id. § 2560-503.1(i)(3)(i).
Reliance’s denial letter sent on April 20, 2015 was 101 days past the 45-day deadline set forth in the
relevant regulations. This is not an inconsequential amount of time. Nor has Reliance asserted facts
or made any effort to demonstrate that its untimeliness was in the context of an “ongoing, good-faith
exchange” with Plaintiff. Therefore, Reliance has not shown “substantial compliance.”
IV.
Conclusion
Plaintiff’s Motion for Partial Summary Judgment (Doc. 17) is GRANTED, and the Court will
apply a de novo standard of review. Plaintiff’s Motion to Pursue Discovery (Doc. 16), which
issue here, 29 C.F.R. § 2560.503-1, because even assuming it does apply, MetLife did not
substantially comply here with ERISA’s requirement of a timely resolution of an administrative
appeal.”).
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requests permission to conduct discovery under the arbitrary and capricious standard and which was
submitted in the alternative to the Motion for Partial Summary Judgment, is DENIED as moot.3
The parties are ordered to submit a Joint Status Report setting forth proposed deadlines for
the remainder of the case no later than two weeks from the date of this Order.
SO ORDERED this ____________________.
3
Plaintiff indicated that, if the Court grants the motion for partial summary judgment and
applies de novo review, “the whole point of that motion [the motion to pursue discovery] becomes
moot.” (Mot. for Partial Summ. J. n.1.)
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