Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:09-cv-03740--Robert W. Gettleman, Judge.
The opinion of the court was delivered by: Tinder, Circuit Judge.
Before MANION, ROVNER, and TINDER, Circuit Judges.
The Employee Retirement Income Security Act of 1974 (ERISA) allows beneficiaries of plans governed by the statute to bring civil actions to recover benefits that are due to them. 29 U.S.C. § 1132(a)(1)(B). But in enacting ERISA, Congress also mandated internal claim review procedures. 29 U.S.C. § 1133(2). Recognizing that Congress gave the primary responsibility for processing claims to ERISA plans as opposed to federal courts, we have held that district courts have discretion to require the exhaustion of ad- ministrative remedies as a precondition to such suits. See Powell v. A.T. & T. Commc'ns, Inc., 938 F.2d 823, 826 (7th Cir. 1991). Yet there are exceptions that may excuse a failure to exhaust. We consider here whether the content of a termination notice, specifically the absence of particular information, caused the beneficiary's failure to exhaust and whether the defendant is estopped from taking advantage of that failure. The district court found that the beneficiary offered no evidence of rea- sonable reliance on the absent information and that even if the notice was deficient, the alleged deficiencies were not material. Finding no abuse of discretion, we affirm.
Deborah Schorsch enrolled in September 1991 in a long- term group disability insurance plan provided through her employer United Conveyor Corporation. Reliance Standard Life Insurance Company ("Reliance") provided coverage for the plan. According to the summary plan description, United Conveyor was the plan sponsor and administrator. Yet the terms of the policy issued by Reliance governed the plan's administration, and United Conveyor delegated authority to determine eligibility for benefits to Reliance as the claims administrator. The policy did not give Reliance discretionary authority to determine benefit eligibility or construe plan terms.
For unknown reasons, United Conveyor apparently never provided Schorsch with the summary plan descrip- tion or any document explaining that ERISA governed the plan.
On August 1, 1992, a car struck the passenger side of the vehicle in which Schorsch was a passenger. Schorsch suffered a contusion and spinal cord damage, which caused her disability. Her symptoms include chronic pain syndrome, restricted movement, incontinence, an inability to concentrate, and fatigue. Schorsch also suffers from the side effects of her pain medicine. United Conveyor submitted a claim to Reliance for long-term disability benefits on Schorsch's behalf. Reliance ap- proved the claim and Schorsch began receiving long- term disability benefits on January 29, 1993. The plan provides that for the first 60 months, "total disability" meant that Schorsch could not perform the material duties of her regular occupation. After 60 months, "total disability" meant that Schorsch could not perform the material duties of any occupation as reasonably allowed by her education, training, or experience. On May 16, 1998, Reliance notified Schorsch that her condition satisfied the more stringent definition of total disability. Reliance told her she was eligible to receive disability benefits until she reached the age of 65 on January 27, 2018, or until her condition no longer satisfied the defini- tion of total disability.
On May 19, 2006, at Reliance's request, Schorsch under- went an independent medical exam with Dr. Richard S. Tuttle, who produced a five-page report finding her capable of performing a full-time medium duty job. The report listed as sources of information (1) Schorsch's account of her primary history, (2) various medical records, and (3) "some surveillance transcripts from March 2006." The surveillance source appears to reference a report from an investigation firm that observed Schorsch's home for three days in March 2006. Based on the exam, Dr. Tuttle found "little objective findings to support any significant restrictions or limita- tions or any significant impairment." But Dr. Tuttle also mentioned in the next sentence that "surveillance" re- vealed that Schorsch "appears to be working out of her house, doing her childcare operation, and appears to be actively employed at this point, regardless." He then stated that based on the exam, he saw "no functional impairment" and "no significant limitations or restrictions" and opined that Schorsch could resume regular employment. Dr. Tuttle did not mention that in March 2006 Reliance sent vocational rehabilitation specialist Daniel Rauch to Schorsch's home to inter- view her. Rauch did not report observing a baby-sitting service but recommended in his report that Reliance should update Schorsch's medical records and ask her treating physician to comment on her ability to work.
Reliance notified Schorsch by letter dated June 13, 2006, that it would terminate her disability benefits on June 29, 2006, because based on her file's medical infor- mation, namely Dr. Tuttle's exam, it determined she could work full-time and thus was no longer totally disabled. The letter stated that Reliance's vocational staff reviewed her "complete claim file" and determined based on her medical condition and past training, educa- tion, and experience that she qualified for a variety of jobs. The notice repeated that the decision was made "based on the information contained in your file and the policy provisions applicable to your claim" and went on to explain that:
Our determination regarding whether you meet your group policy's definition of disability is, and must be, based on the medical documentation in your claim file. We have no basis on which to measure subjective complaints or medical opinions that are not substantiated by the med- ical findings. We must determine if the medical information documents the presence of a physical or mental condition limiting your ability to per- form your own or regular occupation.
The notice did not mention the surveillance report, but stated that Schorsch could "request a review of this denial by writing to" Reliance's address and that:
The written request for review must be sent within 60 days of receipt of this letter and state the reasons why you feel the claim should not have been denied. Include any additional docu- mentation which you feel will support your claim. We will treat the submission of any addi- tional documentation as a request for review unless specifically otherwise instructed. You or your duly authorized representative is also entitled to review the pertinent documents upon which our determination was predicated.
On August 3, 2006, only nine days before the 60-day deadline expired on August 12, Schorsch's counsel sent Reliance a ...