Exhaustion of Administrative Remedies
Exhausting a plan's internal claims procedures prior to litigation is not strictly required under ERISA, but courts generally have imposed this requirement. Amato v. Bernard, 618 F. 2d 559, 568 (9th Cir. 1980); that a plaintiff must first exhaust a plan's administrative remedies under the plan ("exhaustion doctrine") before resorting to federal court. Perrino v. S. Bell & Tel. Co., 209 F.3d 1309, 1315 (11th Cir. 2000) ("[A]s a general rule, plaintiffs in ERISA actions must exhaust available administrative remedies before suing in federal court.")
Similarly, in Mason v. Continental Group, Inc., 763 F.2d 1219, 1227 (11th Cir. 1985), the court concluded that "imposing an exhaustion requirement in the ERISA context appears to be consistent with the intent of Congress ...", cert. denied, 474 U.S. 1087, 106 S. Ct. 863, 88 L. Ed. 2d 902 (1986).
Excusal of the Exhaustion Requirement
However, the decision of a district court to apply the exhaustion doctrine is a highly discretionary decision, which a reviewing court reviews "only for a clear abuse of discretion," and excusal of the exhaustion requirement is proper "when resort to the administrative remedies would be futile or the remedy inadequate." Counts v. Am. Gen. Life & Accident Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997; Glover v. St. Louis-San Francisco Railway Co., 393 U.S. 324, 330-31, 89 S. Ct. 548, 551-52, 21 L. Ed. 2d 519 (1969). (While "application of the administrative exhaustion requirement in an ERISA case is committed to the sound discretion of the district court," that discretion must be exercised "to excuse non-exhaustion where resorting to the plan's administrative procedure would simply be futile.") See also: Fallick v. Nationwide Mutual Ins. Co., 162 F.3d 410, 418 (6th Cir. 1998) ("[W]hen resort to the administrative review process would be an exercise in futility, the exhaustion of remedies doctrine shall not apply.")
In Curry v. Contract Fabricators Profit Sharing Plan, 741 F.Supp. 1061 (M.D. Ala 1988), the court held that exhaustion of administrative remedies is excused if resort to the procedures would be futile, or if the claimant is "wrongfully denied meaningful access" to the administrative procedures. Lieske v. Morlock, 570 F.Supp. 1426, 1429 (N.D. Ill., 1988) (Although § 502, 29 U.S.C. § 1132, does not expressly require a plaintiff to exhaust administrative remedies before bringing suit, it is within the trial court's discretion to apply the exhaustion doctrine in ERISA cases. ... However, ... exhaustion will be excused when resort to such procedures would be futile ...)
In Dozier v. Sun Life Assurance Co. of Canada, 466 F.3d 532, 536 (6th Cir. 2006), the court explained "that Dozier had no reason to seek administrative review of his waiver-of-premium claim ... when Sun Life denied his long-term-disability claim on October 17, 2002. At that point, Dozier still had 32 days to seek administrative review of the waiver-of-premium claim but no rational reason for doing so. In denying the long-term-disability claim, Sun Life had made a final determination that Dozier was able to perform "the Material and Substantial Duties of his Own Occupation." That determination necessarily precluded him from arguing with a straight face to the same insurance company that he was "unable to perform the material and substantial duties of any occupation," the eligibility standard for obtaining the waiver-of-premium benefit. The denial of the easier-to-obtain claim precluded eligibility for the more-difficult-to-prove claim.
When exhasting a plan's internal claims procedures would prove futile, then excusal of the exhaustion requirement is proper.