United States District Court, N.D. Illinois
February 23, 2004.
ANNA KRONING, Plaintiff,
RESURRECTION HEALTH CARE, Defendant
The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Anna Kroning ("Kroning") filed a complaint against Defendant
Resurrection Health Care ("Resurrection") alleging that Resurrection
failed to provide certain health benefits pursuant to a health plan
governed by the Employee Retirement Income Security Act of 1974
("ERISA"). 29 U.S.C. § 1132(a). Before the Court is the Resurrection's
Motion for Summary Judgment filed pursuant to Rule 56 of the Federal
Rules of Civil Procedure. For the following reasons, the Court grants
Resurrection's Motion for Summary Judgment on the issue of Kroning's
failure to exhaust administrative remedies, and stays the present
litigation pending resolution of Kroning's appeal to the Resurrection
Kroning was a participant in Resurrection's Health Care Employee
Benefit Plan (the "Plan"), which is a welfare benefit plan under ERISA.
Blue Cross and Blue Shield of Illinois is the primary
administrative entity for processing claims under the Plan. However,
Accord Behavioral Health Services ("Accord") administers claims for
mental health and substance abuse treatments. In January 2000, Kroning's
son received inpatient treatment and other corresponding benefits that
were subject to preapproval from Accord. The crux of this case centers on
whether Kroning obtained the requisite preapproval for this inpatient
treatment. At this juncture in the litigation, however, it is not
necessary to discuss further the parties' competing factual allegations.
The parties also differ on whether Kroning exhausted her administrative
remedies prior to bringing this lawsuit. Kroning claims that she
contacted Resurrection's Human Resources department shortly after her
son's treatment to obtain assistance in receiving payment from Accord.
Specifically, Kroning alleges that she enlisted the help of Norma Santos
("Santos"), a benefits specialist at Resurrection, and that Santos
assured Kroning that she would "take care of it." Although Paul Skiem
("Skiem") is the designated Plan Administrator at Resurrection (and thus
has the authority to interpret the Plan and decide appeals), Kroning
claims that Skiem "built a wall" around himself such that she was forced
to turn to Santos for administrative remedy. Thus, Kroning argues that
her administrative appeal of Accord's denial began at some point in the
year 2000 and continued for more than two years.
Resurrection, in turn, claims that Kroning never filed a formal appeal
of Accord's denial. Resurrection argues that Kroning's dealings with
Santos were nothing more than an employer assisting an employee in
obtaining benefits and did not invoke any formal appeal process through
Skiem, the Plan Administrator. Resurrection points to an August 16, 2002
letter from plaintiff's counsel, Martha Norman ("Norman"), requesting
that Skiem outline any further administrative remedies, prior to
litigation, that Kroning may have and provide detailed reasons for any
denial of benefits. On August 26, 2002, Skiem responded to Norman's
letter by stating, among other things, that Kroning could request a
review of her denied claims, which she had not done to date. Kroning did
not respond to this letter and on September 30, 2002 filed the present
complaint. Based on this correspondence, Resurrection claims that Kroning
was explicitly invited to appeal the denial of her claims, but refused to
do so. Accordingly, Resurrection alleges that Kroning has failed to
exhaust her administrative remedies.
II. LEGAL STANDARDS
A. Summary Judgment
Summary judgment is appropriate if "the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and
that the moving party is entitled
to a judgment as a matter of law." FED. R. Civ. P. 56(c). A fact is
"material" if it could affect the outcome of the suit under the governing
law; a dispute is "genuine" where the evidence is such that a reasonable
jury could return a verdict for, the nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The burden is initially upon the movant to demonstrate the absence of a
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). In assessing the movant's claim, the court must view all the
evidence and any reasonable inferences that may be drawn from that
evidence in the light most favorable to the nonmovant. Miller v. Am.
Family Mut. Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000). Once the moving
party has met its burden, the nonmoving party "may not rest upon the mere
allegations" contained in its pleading, but rather "must set forth
specific facts showing that there is a genuine issue for trial." FED. R.
Civ. P. 56(e); Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d 107, 110
(7th Cir. 1990); Schroeder v. Lufthansa German Airlines, 875 F.2d 613, 620
(7th Cir. 1989). The nonmovant "must do more than simply show that there
is some metaphysical doubt as to the material facts." Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
B. Exhaustion of Administrative Remedies
The general rule in this Circuit is that a party must exhaust
administrative remedies prior to bringing a civil suit for benefits
under an ERISA plan. See Kross v. Western Elec. Co., 701 F.2d 1238,
1244-45 (7th Cir. 1983); Powell v. A.T. & T. Communications, Inc.,
938 F.2d 823, 826 (7th Cir. 1991); McDougall v. Pelchat, 2003 WL
22057858, *1 (N.D. Ill. 2003). There are strong policy reasons favoring
the exhaustion requirement: implementing this requirement encourages
parties to resolve disputes without judicial intervention, encourages plan
fiduciaries to operate plans efficiently, and, where necessary, provides
a more-complete factual record for judicial review. See Powell, 938 F.2d
at 826; Lindeman v. Mobil Oil Corp., 79 F.3d 647 (7th Cir. 1996).
A district court may excuse failure to exhaust administrative remedies
if (1) there is a lack of meaningful access to administrative review
procedures or (2) exhaustion of internal administrative review would be
futile. See Robyns v. Reliance Standard Life Ins. Co., 130 F.3d 1231,
1236 (7th Cir. 1997). To establish futility, a plaintiff must demonstrate
that it is certain that the claim will be denied on appeal. See id. at
1238. Mere doubt that an appeal will lead to a different result will not
suffice. See id.
Here, Kroning initially claims that she exhausted her administrative
remedies. Kroning argues that she appealed to the Human Resources
Department from the outset and was advised by Santos that Resurrection
"would take care of it." Kroning notes
that she provided all the documentation that Santos requested. In
essence, Kroning argues that her repeated contacts with Santos amounted
to an appeal to Skiem, the Plan Administrator. Kroning bases this
assertion, in part, on the contention that Skiem "built a wall around
himself" such that Kroning was "not able to get around Skiem's wall."
Even when construing the evidence in a light most favorable to
Kroning, she does not make a sufficient showing that she filed an appeal
with the Plan Administrator requesting review of Accord's denial of
benefits. Kroning does not point to any written evidence (or testimony)
that she filed an appeal to Skiem, the Plan Administrator, who
undisputably was the only person with authority to review and determine
appeals. Kroning also makes no showing that Skiem "built a wall" around
himself that precluded her from submitting an appeal. Indeed, the August
15, 2002 letter from Kroning's counsel refers to additional
administrative remedies and there is no dispute that Skiem responded to
this letter with an invitation to conduct a formal appeal. In addition,
Skiem's assertion that Kroning never filed a written request for review
of her denied claims stands uncontested. As such, Kroning has failed to
rebut Resurrection's showing that she failed to file an appeal here.
Finally, it is undisputed that Skiem has not yet issued a denial of
benefits based upon such an appeal.
Nor can Kroning establish that she was denied meaningful access to
administrative review procedures or that exhaustion would be futile. The
following is undisputed: (1) on August 15, 2002, Kroning's attorney
specifically inquired as to the availability of "any further
Administrative Remedies, prior to litigation, that Mrs. Kroning may have"
and requested that Skiem "afford Ms. Kroning a reasonable opportunity to
full and fair review by the appropriate named fiduciary of the decision
denying the claim"; (2) on August 26, 2002, Skiem responded to this letter
and offered formal review of Kroning's claims; and (3) Kroning did not
respond to this offer. Thus, for purposes of summary judgment, Kroning
has effectively admitted that as of August 15, 2002, additional
administrative remedies were available. The Court does not doubt that as
of August 15, 2002, Kroning had strong reservations about the sincerity
of Skiem's offer for administrative review, but that alone is
insufficient to establish that access to such review was unavailable.
Kroning also argues that it would be futile to pursue such
administrative remedies at this point because Resurrection will
undoubtedly deny her appeal based upon its argument in this litigation
that Kroning did not obtain preapproval from Accord. Kroning, however,
does not show as she must that it is a certainty that Resurrection
will deny her appeal. See Robyns, 130 F.3d at 1236. The undisputed facts
show that Santos did assist
Kroning in obtaining benefits for some of her claims and that Skiem
has offered a formal review of Accord's denial. Thus, there is undisputed
evidence in the record tending to show that Resurrection will abide by
its fiduciary obligations and provide a fair appeal. The fact that
Resurrection has raised arguments based on its present adversarial
posture in this litigation does not bind Skiem from reaching a different
result in the administrative appeal process, where Skiem must view
Kroning's appeal consistent with his fiduciary role. Accordingly, the
Court fully expects that the Resurrection Plan Administrator will fulfill
his fiduciary obligations to Kroning and engage in a good-faith and
timely review of Kroning's appeal. (If Kroning fails to file such an
appeal within sixty days, Resurrection may renew its Motion for Summary
The Court reminds Resurrection that it has represented to this Court
that its Plan Administrator stands ready to review the denial of
Kroning's claim with fresh eyes and a fair mind, which will include
consideration of the additional evidence that Kroning has presented
pertaining to her purported contacts with Accord. In addition,
Resurrection has represented to this Court that if Kroning exhausted her
administrative remedies, the Plan, being sponsored by a Catholic
charitable organization, may satisfy the claims from its own resources.
This is precisely the sort of
nonjudicial (and potentially equitable) resolution that the exhaustion
doctrine aims to foster.
Because Kroning has raised the prejudicial impact of additional delay,
the Court expects that Resurrection will engage in an expedited review of
any appeal. Should Kroning make a showing of inordinate delay on the part
of Resurrection following the submission of Kroning's appeal, the Court
will revisit the issue of whether Kroning must continue to exhaust
For the reasons set forth above, Defendant's Motion for Summary
Judgment is GRANTED as to the issue of exhaustion of administrative
remedies. The present litigation is stayed pending the resolution of an
appeal by Kroning to the Plan Administrator.
IT IS SO ORDERED.
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