Benefit Plans, Inc. ("Diversified"), is a third party administrator.
In the summer of 1990, Brian Ross was diagnosed with bilateral retinal detachment and consequently underwent surgery at the University of Illinois Hospital in Chicago. Thereafter, Mr. Ross filed a claim with Diversified for reimbursement of medical expenses associated with the surgery. On September 14, 1990, Diversified denied Mr. Ross' claim on the basis of the pre-existing conditions exclusion provision of the Plan. On June 10, 1991, Mr. Ross sent Diversified a written request for review of the denial of his claim. On July 15, 1991, Diversified informed Mr. Ross that his claim would remain denied.
On February 18, 1992, Mr. Ross and his wife Druezisla brought this action against Diversified in the Circuit Court of Cook County to recover benefits allegedly due under the terms of the Plan pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). On October 5, 1993, the plaintiffs filed an amended complaint adding defendants, the Business Insurance Trust and "The Plan." On December 3, 1993, the defendants removed the action to this Court. Both parties now move for summary judgment pursuant to FED. R. CIV. P. 56.
In support of their motion for summary judgment, defendants argue that plaintiffs failed to timely exhaust the appeal procedures required under the Plan. Specifically, plaintiffs did not comply with the Plan provision requiring participants to appeal an adverse decision within sixty days of the notification denying the claim. In response, plaintiffs maintain that Diversified's letter denying Mr. Ross' claim was defective, and therefore exhaustion should be excused in this case.
The regulations promulgated by the Department of Labor ("DOL") authorize "[a] plan [to] establish a limited period within which a claimant must file any request for review of a denied claim." 29 C.F.R. § 2560.503-1(g)(3). In the present case, the Plan description given to Yellow Cab employees states that Plan participants have sixty days to submit a request for review from the date of receiving notice of an adverse decision. See Complaint, Ex. A, p. 30; Defendants' 12(M) Statement, P 19. Diversified sent Mr. Ross a notice denying the claim on September 14, 1990; Mr. Ross sent Diversified his request for review on or about June 10, 1991. See Defendants' 12(M) Statement, P 13; Affidavit of Robert McDonald ("McDonald Aff."), Exs. B, D.
Accordingly, the record reveals that Mr. Ross waited approximately nine months after receiving notice of the adverse decision to appeal the denial of his claim.
ERISA is silent as to whether exhaustion of administrative remedies is a prerequisite to bringing a civil action. Kross v. Western Electric Co., 701 F.2d 1238, 1244 (7th Cir. 1983). Accordingly, the decision to require exhaustion as a prerequisite to bringing suit is a matter within the discretion of the trial court. Powell v. A.T. & T. Communications, Inc., 938 F.2d 823, 825 (7th Cir. 1991) (citations omitted); Smith v. Blue Cross & Blue Shield United of Wisconsin, 959 F.2d 655, 658 (7th Cir. 1992) (citations omitted). Plaintiffs argue that exhaustion of administrative remedies should be excused in the present case because Diversified's initial denial notice did not satisfy the requirements of 29 U.S.C. § 1133.
2. Adequacy of Denial Notice
ERISA establishes certain minimum requirements for procedures and notification when a plan administrator denies a claim for benefits. In a nutshell, ERISA requires that specific reasons for denial be communicated to the claimant in a comprehensible manner and that the claimant be afforded an opportunity for "full and fair review" by the administrator. Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 688 (7th Cir. 1992). 29 U.S.C. § 1133 provides:
In accordance with regulations of the Secretary, every employee benefit plan shall--