Opinion
No. 1:01CV00411
March 21, 2003
MEMORANDUM OPINION
This matter involves an employee's challenge to the termination of her long-term disability benefits under an Employee Retirement Income Security Act ("ERISA") qualified employee welfare benefit plan. Plaintiff Carol L. Moses ("Plaintiff") initially filed her complaint in the General Court of Justice, Superior Court Division, Forsyth County, on March 20, 2001, against Defendants Unumprovident Corporation, Provident Companies, Inc., and Provident Life and Accident Insurance Company ("Provident") Defendants timely removed this case on the basis of federal question (28 U.S.C. § 1131) because the action is governed by ERISA, 29 U.S.C. § 1001, et seq. This action is currently before the court on cross motions for summary judgment. Because Plaintiff failed to exhaust the administrative remedies provided by the employee benefit plan, the court will grant Provident's motion for summary judgment and will deny Plaintiff's motion for summary judgment.
Plaintiff voluntarily dismissed Defendants Provident Companies, Inc. and Unumprovident Inc., on May 31, 2001.
I. FACTUAL BACKGROUND
Plaintiff was employed as a customer service representative by Southern National Corporation (now known as BBT) until on or about March 31, 1995. Because of severe back problems, Plaintiff applied for and began receiving long-term disability benefits in October 1995 under a self-funded plan initially administered by Aetna Life Insurance Company. On January 1, 1996, Plaintiff began receiving her long-term disability insurance coverage through a group policy funded by Provident, the new plan administrator. Pursuant to the plan, Plaintiff received disability benefits in the amount of $790.46 per month, 60% of her basic monthly earnings. (Rand Aff. Ex. A at 209.)
Based on medical documentation from the administrative record and an independent investigation of Plaintiff's activities, Provident terminated Plaintiff's disability benefits by certified letter, dated January 19, 1998. Provident indicated that Plaintiff was no longer eligible for long-term disability benefits under the plan because Provident discovered that Plaintiff was not disabled from her occupation. (Pl.'s Mot. Summ. J. Ex. 35.) The letter also indicated that Plaintiff had 60 days in which to appeal to Provident for a review of its determination:
If you disagree with our determination, you may submit a written request for reconsideration, accompanied by documents or records from your physician in support of your appeal. All of the information you wish to use for your appeal must be received in our office within 60 days after the date of receipt of this letter. Any information received after 60 days will not be considered.
(Id.) In addition to this letter, the terms of Plaintiff's employee benefit plan, originally set out by Aetna but administered by Provident, expressly stated the internal dispute procedure for the denial of disability benefits:
Aetna has the right to require proof that: you . . . [have] made a timely appeal of any denial through the highest Administrative level. Timely appeal means making such an appeal as required, but in no case later than 60 days from the latest denial. . . . when a timely application for benefits has been made and denied, a request for reconsideration must be made within 60 days after the denial, unless Aetna states, in writing, that it does not require you to do so. Also, if the reconsideration is denied, an application for a hearing before an Administrative Law Judge must be made within 60 days of that denial unless Aetna relieves you of that obligation.
(Foster Aff. Ex. C at 12.)
Provident requested a return receipt card from the United States Postal Service for its January 19, 1998, letter sent to Plaintiff's Elkin, North Carolina, residence. The receipt card showed that the letter was returned and date stamped at Provident's offices in Chattanooga, Tennessee, on January 22, 1998. The receipt card did not indicate, however, the name and/or signature of the individual who received the letter. Plaintiff suggested that she did not receive the letter because of her frequent vacations to Florida during January 1998, and because her attorney at the time, Mr. Alexander, may have "picked up the letter" because they had an agreement in which Mr. Alexander received the mail when she was in Florida with her husband and/or her son. (Moses Aff. ¶ 3.) Plaintiff admitted, however, that she was only in Florida from "December 23, 1997 to January 17, 1998; January 30, 1998 to February 6, 1998; and February 27, 1998 to March 13, 1998." (Id.)
Plaintiff contends that she first discovered the letter terminating her benefits when she retrieved her file from Mr. Alexander's office in late January 2001. (Id.) Plaintiff alleges that Mr. Alexander reassured her that he took the appropriate steps to appeal Provident's decision to terminate her disability benefits. Provident, on the other hand, contends that no appeal, written or otherwise, was ever received by the company.
Plaintiff discontinued Mr. Alexander's services in late January 2001 after she discovered that he had been disbarred. Plaintiff has filed multiple claims against Mr. Alexander for negligent misrepresentation, constructive fraud, conversion, and negligence, and has obtained two default judgments against him. (Pl.'s Br. Resp. Def.'s Summ. J. Br. Ex. 36I, 36J.) In addition to these civil proceedings, Mr. Alexander was indicted in June 2002 for allegedly embezzling over $72,000 from Plaintiff and her husband. (Pl.'s Br. Resp. Def.'s Summ. J. Br. Ex. 37, 38, 39.)
The only record of communication involving Plaintiff's long-term disability insurance coverage after Provident's termination letter was between Plaintiff and her employer, BBT. In a letter dated September 17, 1998, from BBT's Benefits Administrator, Ms. Rose Ketner, to Plaintiff, Ms. Ketner indicated that:
At the time you are no longer deemed disabled by Provident, your employment status will change from active to terminated with BBT. At that time you will no longer be eligible for benefits offered by BBT. . . . On May 31, 1998, your employment status with BBT was changed from active to terminated.
(Pl.'s Br. Resp. Def.'s Summ. J. Br. Ex. 36A.) In response to this letter, Mr. Alexander's October 28, 1998, letter to BBT referenced Provident's termination of Plaintiff's disability benefits by stating that "we do not agree with the termination of Carol Moses' benefits under the disability plan through BBT. . . . Timely notice of disagreement was sent. . . ." (Pl.'s Br.
Resp. Def.'s Summ. J. Br. Ex. 36B.) Provident has neither of the letters between Plaintiff and BBT in Plaintiff's claim file, nor does Provident have any other records in Plaintiff's claim file except the January 19, 1998, termination letter. (Pl.'s Mot. Summ. J. Ex. 35.) There is no evidence of Mr. Alexander's "[t]imely notice of disagreement" with Provident's decision to terminate Plaintiff's disability benefits in the record before the court.
Plaintiff alleges that Provident breached its contract with her when it wrongfully denied her continued long-term disability insurance coverage. She seeks the long-term disability benefits pursuant to the policy that have accrued from January 1998 until the present, compensatory damages, and attorney's fees.
II. STANDARD OF REVIEW
Summary judgment is appropriate if an examination of the pleadings, affidavits and other proper discovery materials, viewed in the light most favorable to the non-moving party, indicates that there exists no genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). The essential question for the court's determination is whether the evidence "is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512 (1986). Unless the non-moving party comes forward with specific facts demonstrating a genuine issue for trial, summary judgment is proper as a matter of law.Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986).
III. ANALYSIS
Provident sets forth three arguments in support of its motion for summary judgment: (1) Plaintiff did not exhaust the administrative remedies provided by the employee benefit plan, (2) Plaintiff's suit is barred by the statute of limitations, and (3) Plaintiff no longer meets the definition of "total disability" so as to entitle her to continued long-term disability benefits based on the evidence in the administrative record. The court will analyze each of these grounds separately in deciding the cross motions for summary judgment.
On the first ground, failure to exhaust the administrative remedies, the Fourth Circuit has held that an employee must exhaust the administrative remedies provided by the employee benefit plan prior to bringing an ERISA action for denial of benefits pursuant to 29 U.S.C. § 1132. Makar v. Health Care Corp. of Mid-Atlantic (Carefirst), 872 F.2d 80, 82 (4th Cir. 1989). Although the text of ERISA does not mandate such administrative compliance as a prerequisite to bringing a civil action, Congress' intent was to encourage private resolution of ERISA disputes, and ERISA's "text and structure" supports this conclusion. Id. If an employee fails to follow the benefit plans' internal procedures for review of a denial of benefits, summary judgment should be granted for failure to exhaust the administrative remedies under ERISA. United Paper Workers Int'l Union Local 425 v. Champion Int'l Corp., 990 F. Supp. 423, 427 (E.D.N.C. 1998); Knight v. Unum Life Ins. Co. of Am., No. 1:98CV01087, at 10 (M.D.N.C. Mar. 8, 2001).
As part of the internal dispute procedures, employee benefit plans are required to provide employees whose benefits have been denied with "(1) . . . adequate notice in writing. setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and (2) afford a reasonable opportunity . . . for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. § 1133 (1),(2).
Here, Plaintiff's employee benefit plan as well as Provident's letter included specific, written procedures to appeal the denial of disability benefits. Provident received confirmation that its notice was delivered to Plaintiff's residence, and subsequently, Provident did not receive any inquiry or communication from Plaintiff regarding the denial of benefits. Provident was not required to do anything more, by statute or by reason, to ensure that Plaintiff had notice of the letter terminating her benefits. Provident did not waive the appeal requirements either explicitly or implicitly.
The October 28, 1998, letter from Mr. Alexander objecting to Provident's decision to terminate Plaintiff's disability benefits was sent to BBT, not Provident. Regardless of the recipient, though, this letter was sent well after the 60-day appeal period.
Plaintiff conceded that Provident sent a letter "advis[ing] that the Plaintiff had sixty days in which to send an appeal. . . ." (Compl. ¶ 11.) Yet, Plaintiff asserts that she is excused from this requirement because her attorney falsely represented to her that he was protecting her rights of appeal of Provident's decision to terminate her disability benefits. Plaintiff argues that even though she might not have known about Provident's termination letter until after the 60 days had expired, the statute of limitations should be extended by 60 days to account for the appeal process. Thus, Plaintiff argues, this court has subject matter jurisdiction over her claim because it was filed within three years and 60 days of the date her disability benefits were denied ("some time after March 20, 1998"). (Pl.'s Br. Resp. Def.'s Summ. J. Br. at 6.)
Both parties agree that the applicable statute of limitations is three years from the date that Plaintiff's disability benefits were terminated. See N.C. Gen. Stat. § 1-52(1). The parties do not agree, however, on the exact date of termination of the disability benefits.
Plaintiff's argument is contradictory, however, because she seeks to invoke the 60-day appeal period as an extension of the statute of limitations while simultaneously saying that she was not subject to the 60-day appeal requirement. The court is not persuaded that the 60-day appeal period applied from the moment Plaintiff said she had actual knowledge of Provident's termination letter. Rather, the plan itself makes reference to the requirement that Plaintiff must appeal within 60 days of the decision to terminate benefits. (Foster Aff. Ex. C at 12.) Even if the court accepts Plaintiff's suggestion that she did not actually receive the termination letter on January 22, 1998, it is implausible that she did not know about the termination letter for 60 days thereafter because she stopped receiving disability checks and decided to hire Mr. Alexander as her attorney. The record does not indicate that Plaintiff contacted Provident about why her disability checks had ceased.
First, Plaintiff cannot provide an exact date on which she had actual knowledge of Provident's letter terminating her benefits. Second, neither ERISA, nor the employee benefit plan, nor Provident's letter requires that an employee have actual knowledge of the denial of benefits before commencement of the 60-day appeal period. Rather, the plan states that the appeal period begins "after denial," and the letter states that the appeal period begins "60 days after the date of receipt of this letter." Although proof of actual receipt of the letter is lacking, Plaintiff constructively received the letter because she retained an attorney and did not inquire of Provident as to why her benefit checks had ceased.
Although Mr. Alexander's actions might have been the cause of Plaintiff's failure to timely file an appeal, such an excuse has not been recognized as a justification for non-compliance with the administrative procedures prescribed by ERISA. See Hylaszek v. Aetna Life Ins. Co., 1997 WL 136282, at *3 (N.D. Ill. Mar. 19, 1997) (holding that a claimant may be excused from not exhausting the administrative remedies if he or she "has been denied meaningful access to review procedures, or where employing such procedures would be futile."). Plaintiff has not argued that either of these exceptions (lack of meaningful access to review procedures or futility) applies to her case. In addition, Plaintiff has not shown the court that she was incompetent or prevented against her will from finding out that her benefits had been terminated through Provident's letter. If one's attorney's false representations sufficiently justified non-compliance, Congress' intent in mandating such expeditious internal claim procedures would not be realized fully. See Makar, 872 F.2d at 83.
Despite the specific instructions in both the plan and the letter terminating her benefits, Plaintiff failed to file an appeal within the 60-day period. Plaintiff's failure to timely file an appeal with Provident precludes this court from adjudicating the substance of her ERISA claim. If Plaintiff is entitled to a remedy, it lies with Mr. Alexander to compensate her for her losses during the representation; a remedy with this court is unavailable because of plaintiff's failure to exhaust the administrative remedies.
Because the court is able to resolve these cross motions for summary judgment on the procedural basis that Plaintiff failed to exhaust the available administrative remedies, and has addressed the statute of limitations defense within this discussion, the court will not address the substantive issue of whether Plaintiff is "totally disabled" under the plan's definition. The court will grant Provident's motion for summary judgment because of Plaintiff's failure to exhaust the administrative remedies provided by the employee benefit plan.
IV. CONCLUSION
For the reasons set forth above, the court will grant Defendant Provident Life and Accident Insurance Company's Motion for Summary Judgment and will deny Plaintiff Carol L. Moses' Motion for Summary Judgment.
A judgment in accordance with this memorandum opinion shall be filed contemporaneously herewith.