Summary
In Hasten, the plaintiff applied for long-term disability benefits on July 25, 2019, making the initial determination deadline September 8, 2019.
Summary of this case from Witt v. Intel Corp. Long-Term Disability PlanOpinion
Case No. 19-cv-07943-JSW
07-06-2020
Vennessa HASTEN, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
Cassie Springer Ayeni, Jeena Renee Jiampetti, Springer Ayeni, a Professional Law Corporation, Oakland, CA, for Plaintiff. Jason A. James, Linda Marie Lawson, Grant Edward Ingram, Meserve Mumper & Hughes LLP, Los Angeles, CA, for Defendant.
Cassie Springer Ayeni, Jeena Renee Jiampetti, Springer Ayeni, a Professional Law Corporation, Oakland, CA, for Plaintiff.
Jason A. James, Linda Marie Lawson, Grant Edward Ingram, Meserve Mumper & Hughes LLP, Los Angeles, CA, for Defendant.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS
Re: Dkt. No. 24
JEFFREY S. WHITE, UNITED STATES DISTRICT JUDGE
Now before the Court is the motion filed by Defendant The Prudential Insurance Company of America ("Defendant") to dismiss the first amended complaint. Having carefully reviewed the parties' papers and the relevant legal authority, the Court DENIES Defendant's motion to dismiss. BACKGROUND
Plaintiff Vennessa Hasten ("Plaintiff") brought this action for declaratory, injunctive, and monetary relief for recovery of long-term disability benefits pursuant to Sections 502(a)(1)(B) and 502(g) of the Employee Retirement Income Security Act of 1974 ("ERISA"). 29 U.S.C. § 1132(a)(1)(B) ; 1132(g).
Plaintiff worked for Nvidia Corporation as a Senior Human Resources Business Partner and participated in the company's ERISA benefit plan, including the long-term disability ("LTD") plan ("the Plan"). (Dkt. No. 6, First Amended Complaint ("FAC"), at 2:10-13.) Nvidia's LTD Plan provides that if a claim for benefits is denied, or if the claim is not decided within the given timeframe, the claimant may appeal the decision to the insurer. (Dkt. No 24-14, Declaration of Karen Petrone, Ex. 3 at 38-39.) Plaintiff has suffered from worsening health conditions beginning in her childhood. (FAC at 3:25.) She has undergone multiple procedures and medical treatments to care for endometriosis as well as chronic back and pelvic pain. (FAC at 3:14-5:20.) Ultimately, due to the severity of Plaintiff's symptoms, she stopped working in April of 2018 and went on medical leave. (FAC at 2:28.) Plaintiff submitted a claim to Defendant, her company's insurer, in July of 2019 for long-term disability benefits. (FAC at 5:24-25.) After extended deliberations between the parties, Defendant denied the claim on November 27, 2019. (Dkt. No. 24-10, Declaration of Tamika Williams ("Williams Decl."), Ex. 9.) Plaintiff subsequently filed suit on December 4, 2019.
The denial letter is incorrectly dated November 21, 2019. The final decision letter was sent to Plaintiff's counsel on November 27, 2019. (Williams Decl., at 2:24-3:2.)
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Defendant alleges that this lawsuit is premature because Plaintiff failed to exhaust her administrative remedies available under the Plan prior to filing suit. Plaintiff contends she should be deemed to have exhausted her administrative remedies because Defendant unreasonably delayed in its decision-making and failed to follow the proper procedures for claim review required by ERISA.
On July 25, 2019, Plaintiff applied for long-term disability benefits. (FAC at 5:24-25.) One of the requirements in the disability benefits claims process under ERISA is that an administrator must render a decision within 45 days of receipt of the claim. 29 C.F.R. § 2560.503-1(f)(3). ERISA also allows for two 30-day extension periods, provided certain qualifying factors are met. Id. Thus, in total, the maximum potential time that an administrator may take to render a decision is 105 days. In the current matter – 45 days from July 25, 2019 is September 8, 2019 and 105 days from July 25, 2019 is November 7, 2019.
On August 19, 2019, Defendant sent a letter to Plaintiff's counsel stating, "We are writing to let you know that we received medical records, activities of daily living questionnaire, and capacity questionnaire. At this time, we are taking an extension of up to 30 days to make a determination on your claim for LTD benefits." (Williams Decl., Ex. 3.) Thirty days from August 19, 2019 is September 18, 2019. Also on August 19, 2019, Defendant sent a letter to Plaintiff's doctor in which the insurer requested feedback on the medical evaluation conducted by the insurer's nurse. (Id. at Ex. 2.) On August 21, 2019, Defendant left a voicemail to request additional information from Plaintiff's counsel. (Id. at Ex. 1.) Counsel attempted to reach Defendant throughout the following week. (Dkt. No. 28-1, Declaration of Cassie Springer Ayeni, Ex. 1.) On September 16, 2019, two days before the expiration of the 30-day extension period, Defendant followed up with Plaintiff's doctor for the requested feedback and informed Plaintiff the insurer was still awaiting the doctor's response. (Williams Decl., Ex. 1.) Defendant also sent a letter to Plaintiff explaining it was "unable to make a determination" on the claim because the insurance company still needed the Activities of Daily Living Questionnaire, the capacity questionnaire, and Plaintiff's doctor's response to the letter dated August 19, 2019. (Id. at Ex. 4.) Plaintiff indicated that Defendant had previously confirmed receipt of the two questionnaires, but nonetheless, Plaintiff resubmitted the questionnaires on September 25, 2019. (Id. at Ex. 5.) Defendant also emailed Plaintiff's counsel with two follow-up questions regarding Plaintiff's medical history and Plaintiff's counsel responded two days later, on September 27, 2019. (Id. at Ex. 6.) Defendant confirmed the file was complete 18 days later, on October 15, 2019. (Id. at Ex. 1.) On November 13, 2019, 29 days after the file was confirmed complete, Defendant advised Plaintiff that the insurer needed additional time to render a decision on the claim. (Id. at Ex. 8.) In its letter, Defendant stated, "This letter is being sent to advise you that we are unable to make a determination on your claim for LTD benefits." (Id. ) Defendant finalized and mailed its decision letter denying Plaintiff's claim on November 27, 2019, 125 days from the date the claim was filed. (Id. at Ex. 9.)
ANALYSIS
A. Exhaustion of Administrative Remedies.
Defendant moves to dismiss for failure to exhaust administrative remedies. "As a general rule, an ERISA claimant must exhaust available administrative remedies before bringing a claim in federal court." Barboza v. California Ass'n of Professional Firefighters , 651 F.3d 1073, 1076 (9th Cir. 2011). "However, when an employee benefits plan fails to establish or follow ‘reasonable claims procedures’ consistent with the requirements of ERISA, a claimant need not exhaust because his claims will be deemed exhausted." Id. The Ninth Circuit recognizes exhaustion of administrative remedies as an affirmative defense that defendants "must plead and prove." Albino v. Baca , 747 F.3d 1162, 1166 (9th Cir. 2014) (en banc). The Court in Albino held that, generally, exhaustion questions should be decided on a motion for summary judgment, "followed, if necessary, by a decision by the court on disputed questions of material fact relevant to exhaustion." Id. at 1171. However, "in the rare event that a failure to exhaust is clear on the face of the complaint," the defense may be brought in a motion to dismiss. Id. at 1166. See Norris v. Mazzola , No. 15-CV-04962-JSC, 2016 WL 1588345, at *6 (N.D. Cal. Apr, 20, 2016) ("While [ Albino ] did not explicitly overrule the prior rule treating a motion to dismiss an ERISA claim for failure to exhaust administrative remedies as an unenumerated motion to dismiss, it implicitly did so.").
Plaintiff does not dispute that she had not exhausted her administrative remedies prior to filing this lawsuit. Rather, Plaintiff asserts that the ERISA Regulations passed in 2018 mandate that if an ERISA plan administrator "fails to strictly adhere to all the requirements of this section with respect to a claim, the claimant is deemed to have exhausted the administrative remedies available under the plan," and the remedy is to file a claim under ERISA Section 502. 29 C.F.R. § 2560.503-1(1)(2).
Courts generally require exhaustion of claims procedures as a prerequisite to bringing suit for benefits under ERISA. See Diaz v. United Agric. Employee Welfare Benefit Plan & Trust , 50 F.3d 1478, 1483 (9th Cir. 1995). Courts impose an exhaustion requirement on claimants in order to uphold the congressional desire that ERISA trustees be responsible for their actions, and to provide a sufficiently clear record of administrative action if litigation should ensue. See Amato v. Bernard , 618 F.2d 559, 567 (9th Cir. 1980). The exhaustion requirement also reduces the number of frivolous lawsuits, minimizes costs, and promotes consistent treatments of claims for benefits and a non-adversarial method of claims settlement. Id.
The Court has discretion to decide whether to require an ERISA claimant to exhaust administrative remedies and may excuse the exhaustion requirement under certain circumstances. See id. at 568. ("[Despite] the usual applicability of the exhaustion requirement, there are occasions when a court is obliged to exercise its jurisdiction and is guilty of an abuse of discretion if it does not, the most familiar examples perhaps being when resort to the administrative route is futile or the remedy inadequate.")
B. Timeliness.
After Defendant denied Plaintiff's claim for benefits, Plaintiff filed this lawsuit, and did file an administrative appeal the denial as provided in the terms of the Plan. Plaintiff argues not that she exhausted her administrative remedies under the Plan, but rather, that her administrative remedies should be deemed exhausted because the claim decision rendered by Defendant was untimely. The pertinent provision of the ERISA regulations provides in relevant part, "if the plan fails to strictly adhere to all the requirements of this section with respect to a claim, the claimant is deemed to have exhausted the administrative remedies available under the plan." 29 C.F.R. § 2560.503-1(1)(2). The requirements governing timeliness for ERISA disability benefits claims provide that an administrator must render a decision within 45 days of receipt of the claim. 29 C.F.R. § 2560.503-1(f)(3). Two extensions of up to 30 days are available provided that the extension is "necessary due to matters beyond the control of the plan" and the insurer notifies the claimant "of the circumstances requiring the extension of time and the date by which the plan expects to render a decision." Id. If the insurer takes an extension, the notice to claimant must "specifically explain the standard on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues." Id. In addition, notice of any extension period must be provided prior to the expiration of the current period. Id.
Twice Defendant notified Plaintiff that it needed additional time to render a decision. Both times, Defendant failed to meet the requirements for an extension as outlined above. Defendant did not indicate that the delayed response time was due to circumstances beyond control of the Plan. Defendant did not identify a reason for the extension other than it needed more time. Defendant did not offer an anticipated decision date. In the first extension notification letter dated August 19, 2019, sent on day 25 of Defendant's initial 45-day decision window, Defendant merely wrote, "At this time, we are taking an extension of up to 30 days to make a determination on your claim for LTD benefits." (Williams Decl., Ex. 3). In the second letter, Defendant stated, "This letter is being sent to advise you that we are unable to make a determination on your claim at this time. We require an additional period of time to make a determination on your claim for LTD benefits." (Id. at Ex. 8). This second extension notification was sent 56 days after the first extension period had expired. It is undisputed that Defendant failed to meet the timelines outlined in the regulations promulgated by the Department of Labor for ERISA claims, and it is similarly clear Defendant did not follow the proper procedures for taking the extensions.
C. Tolling.
However, under 29 C.F.R. Section 2560.503-1(f)(4), if an administrator is awaiting necessary information from the claimant, the time periods are tolled until such information is received. Defendant argues that the decision deadline was tolled for a total of 37 days: 35 days between August 21, 2019 and September 25, 2019, and 2 days between September 25, 2019 and September 27, 2019. However, on August 19, 2019, Defendant had confirmed receipt of the two questionnaires it requested from Plaintiff on August 21, 2019. Thus, per Defendant's letter dated September 16, 2019, the only information it was awaiting was a response from Plaintiff's doctor. (Id. at Ex. 4.) Defendant does not contend that a response was received nor does the record reflect receipt of a response. Thus, the Court cannot determine what the appropriate tolling period should be, if any, for the doctor's delay. In addition, tolling is only appropriate where the information is "necessary to decide [the] claim." 29 C.F.R. § 2560.503-1(f)(4). As Defendant ultimately decided the claim presumably without a response from the doctor, it is not clear that the doctor's response was necessary to Defendant's decision or that the absence of the additional information contributed to an unavoidable delay. Accepting Defendant's argument of a two-day tolling period between September 25, 2019 and September 27, 2019, the October 8, 2019 expiration of the first extension period is thus tolled to October 10, 2019. The plan administrator must notify the claimant of a second extension prior to the expiration of the first. See 29 C.F.R. § 2560.503-1(f)(3). However, Defendant did not take the second extension until November 13, 2019. (Williams Decl., Ex. 8.) Thus, Defendant failed to satisfy the requirements of 29 C.F.R. Section 2560.503-1.
D. Strict Adherence.
Under 29 C.F.R. Section 2560.503-1(l)(2)(i), if an insurer fails to "strictly adhere" to claim handling requirements, the claimant is deemed to have exhausted his or her administrative remedies and is entitled to file suit in federal court. Non-binding, early precedent within the Ninth Circuit cited by Defendant suggests "substantial compliance" with ERISA deadlines may be sufficient. See Mitchell v. Aetna Life Ins. Co. , 359 F. Supp 2d 880, 886-87 (C.D. Cal. 2005) (finding that defendant's "substantial," though not perfect, compliance with internal and Department of Labor deadlines was satisfactory). However, the version of the ERISA regulations from 2018 post-dating the district court decision explicitly add the "strict adherence" standard. Under the new regulations, if the plan administrator fails to adhere to ERISA regulations, the claimant does not have to exhaust his or her administrative remedies unless the error was "de minimis." 29 C.F.R. § 2560.503-1(l)(2)(ii). It is uncontested that the Defendant failed to decide Plaintiff's claim within the time frames defined in the pertinent regulations. In addition, Defendant failed to follow procedures for properly requesting deadline extensions. Thus, the Court finds that Defendant did not strictly adhere to the claim handling process as required under the applicable ERISA regulations.
E. De Minimis Violations.
29 C.F.R. Section 2560.503-1(l)(2)(ii) provides that administrative remedies are not "deemed exhausted based on de minimis violations that do not cause, and are not likely to cause, prejudice or harm to the claimant so long as the plan demonstrates that the violation was for good cause or due to matters beyond the control of the plan and that the violation occurred in the context of an ongoing, good faith exchange of information between the plan and the claimant." Here, Plaintiff does not contend that she had been prejudiced or harmed by the insurer's untimely claim decision. In addition, the timeline of events indicates that the parties were engaged in an ongoing exchange of information. However, Defendant has not demonstrated that the delays were for good cause or due to matters beyond control of the Plan. Thus, the Court finds Defendant does not merit the de minimis violation exception to the strict adherence standard.
CONCLUSION
For the foregoing reasons, the Court DENIES Defendant's motion to dismiss the first amended complaint. The court HEREBY RESETS the initial case management conference for August 7, 2020 at 11:00 a.m. The parties shall file their joint case management statement including a proposed deadline to complete private mediation, by no later than July 31, 2020.