Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-30-2002

Harrow v. Prudential Ins Co
Precedential or Non-Precedential:

Docket 0-5049




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Filed January 30, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-5049

STANLEY HARROW, on behalf of himself and all others
similarly situated; DEBRA HARROW, Administrator of the
Estate of Stanley Harrow

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA; JOHN
DOES No. 1-10, individually and in their fiduciary Plan
Administrators of the Prudential Health Care Plans

       DEBRA HARROW, Administrator of
       the Estate of Stanley Harrow, on
       behalf of the Estate of Stanley
       Harrow and all others similarly
       situated,
       Appellant

On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action No. 98-cv-02464
(Honorable John W. Bissell)

Argued: September 22, 2000

Before: SLOVITER, SCIRICA and GARTH, Circuit   Judges

(Filed: January 30, 2002)
       MICHAEL D. GOTTSCH, ESQUIRE
        (ARGUED)
       RAMONA MARIANI, ESQUIRE
       Chimicles & Tikellis
       One Haverford Centre
       361 West Lancaster Avenue
       Haverford, Pennsylvania 19041

       KENNETH A. JACOBSEN, ESQUIRE
       22 West Front Street
       Media, Pennsylvania 19063

        Attorneys for Appellant

       JAMES C. ORR, ESQUIRE
        (ARGUED)
       KELLY A. WATERS, ESQUIRE
       Wilson, Elser, Moskowitz, Edelman
        & Dicker
       33 Washington Street
       Newark, New Jersey 07102

        Attorney for Appellee,
       Prudential Insurance Company of
       America

OPINION OF THE COURT

SCIRICA, Circuit Judge.

Debra Harrow, administratrix of her husband Stanley
Harrow's estate, appeals an order granting summary
judgment to Prudential Insurance Company on her claim
that Stanley Harrow and a putative class of plaintiffs were
wrongfully denied insurance coverage for Viagra, in
violation of the Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. S 1132(a)(1)(B) and 29 U.S.C.
S 1104(a). The District Court granted Prudential's motion
for summary judgment, finding plaintiff failed to exhaust
administrative remedies before instituting suit. Harrow v.
Prudential Ins. Co., 

(D.N.J. 1999).

We will affirm.

                                  2
I.

Stanley Harrow was insured under the Prudential
HealthCare HMO Plan through his wife, Debra Harrow. In
1998, Mr. Harrow was prescribed Viagra, an FDA-approved
drug, for diabetes-related impotence.1 On April 21, 1998,
Mr. Harrow filled his prescription for Viagra at a local
pharmacy. During this visit, his pharmacist informed him
that his insurance did not cover Viagra, charged him
$85.99 to fill the Viagra prescription, and instructed him to
call Prudential. Upon returning home, Mr. and Mrs. Harrow
reviewed the Prudential HealthCare HMO Plan handbook.
On that same day, Mrs. Harrow called the claims
department number listed on the back of the Prudential
prescription card. She was informed by an unidentified
person that the plan did not cover Viagra because it was a
"new drug." She was also advised to save her receipts for
future reimbursement in case Viagra became covered. The
Harrows never contacted Prudential again about Viagra
coverage and never refilled the prescription. On May 21,
1998, a month after being told Viagra was not covered, Mr.
Harrow filed suit under ERISA. In June or July of 1998,
Prudential announced in a press release that it would not
provide coverage for Viagra.

Prudential's procedures for receiving and resolving
complaints raised by covered persons are set forth in the
Prudential HealthCare HMO Plan handbook.2 Under the
heading "Grievance Resolution Procedure," the multi-step
process is described as follows:

       COMPLAINTS:

       Complaints can be received by the Membership
_________________________________________________________________

1. Viagra received FDA approval on March 27, 1998.

2. As noted, the Harrows received the Prudential handbook outlining
these procedures and reviewed the handbook prior to calling the
telephone number on their Prudential prescription card. But Mr. Harrow
asserted that he learned of Prudential's internal grievance procedures for
the first time during deposition questioning by opposing counsel. When
asked whether he made any follow-up telephone calls or wrote any
letters after reviewing the plan documents, Mr. Harrow stated only that
he gave the plan documents to a lawyer.

                               3
       Services Coordinator in the Prudential HealthCare
       Member Services Department by phone, mail or a
       personal visit to the Prudential HealthCare office. The
       Membership Services Coordinator will provide an
       answer to the complainant within 30 days of a
       complaint's receipt. If your problem is not resolved to
       your satisfaction, you may file, in writing, a formal
       grievance.

       GRIEVANCES:

       There are two steps in the Grievance Procedure. At any
       state of this process, the member has the right to
       request that Prudential HealthCare appoint a member
       of its staff, who has had no direct involvement with the
       case, to represent the member.

       STEP ONE:

       If the complaint procedure does not resolve your
       problem to your satisfaction, you may file, in writing, a
       formal grievance. The initial grievance will be reviewed
       and investigated by an Initial Grievance Committee
       . . . . The Committee will provide a response, in writing,
       to the complainant within 30 days of receipt of the
       grievance, including the reasons for the decision and
       the member's appeal rights. This decision is binding
       unless the member appeals the decision . . . .

       STEP TWO:

       APPEAL OF GRIEVANCES

       If an appeal is desired, the complainant will be advised
       to formally request, in writing, the convening of the
       Second Level of Grievance Review Committee . . . . This
       committee shall consist of at least one-third Prudential
       HealthCare Plan members . . . .

       An ultimate appeal procedure is available to the
       member. If the member is not satisfied with the
       decision of the Second Level Grievance Review
       Committee, the decision may be appealed to the
       Pennsylvania Department of Health.

Several Prudential officials testified the outcome of the

                               4
internal appellate process was not pre-determined. 3

. No evidence was presented
demonstrating that Mr. Harrow or any proposed class
member initiated a grievance or appeal under Prudential's
grievance resolution procedure. 

filed a motion to dismiss, which the District
Court denied without prejudice on January 25, 1999. In
the same order, the District Court adjourned, without date,
plaintiff 's motion for class certification so that discovery
could be undertaken. The originally named plaintiff, Stanley
Harrow, died on June 25, 1999 and his wife was
substituted as the named plaintiff and proposed class
representative.4 The District Court subsequently granted
defendant's motion for summary judgment on December
23, 1999. 

The District Court granted summary judgment for the
defendant on plaintiff 's wrongful denial of benefits claim for
failure to exhaust administrative remedies: "Making one
step which could be construed as an initial complaint does
not constitute exhaustion of all remedies, particularly when
the Plan includes a concrete description of the appeal
_________________________________________________________________

3. These employees included Dr. Anthony Martin Kotin, Chief Medical
Officer for Prudential HealthCare group, and Dr. Lisa Head, Chief
Pharmacy Officer and Vice President of National Program and Business
Development.

4. Plaintiff seeks to represent the following class:

       all persons covered by a Prudential insurance plan or policy   under
       an employee welfare benefit plan who have (i) been diagnosed   by a
       physician as being either organically, structurally, or
psychologically
       impotent; (ii) have had Viagra prescribed by a physician for   their
       impotence; and (iii) have been denied insurance coverage for   all or
       a portion of their Viagra prescription.

5. Plaintiff 's motion for class certification was not heard in light of
the
grant of summary judgment. The District Court explained that its grant
of summary judgment on the grounds of lack of exhaustion precluded
any further action. 

We see no merit to plaintiff 's argument
that exhaustion of administrative remedies should be waived when
plaintiff seeks class-wide declaratory relief.

                               5
process available." 

The District Court also
concluded the futility exception to the exhaustion
requirement did not apply because "neither Mr. Harrow nor
any identified potential class member ever pursued any
appellate procedures with Prudential." 

In
addition, the District Court granted summary judgment on
plaintiff 's breach of fiduciary duty claim for failure to
exhaust administrative remedies, concluding plaintiff was
actually seeking benefits and therefore was subject to the
exhaustion doctrine. 

This appeal followed.

III.

The District Court had jurisdiction under 28 U.S.C.
S 1331. 

We have jurisdiction under 28 U.S.C.
S 1291.

IV.

We exercise plenary review over an appeal from a grant of
summary judgment, applying the same standards as the
District Court. Ingersoll-Rand Fin. Corp. v. Anderson, 

, 498 (3d Cir. 1990). We review de novo the
applicability of exhaustion principles, because it is a
question of law. Cf. Diaz v. United Agric. Employee Welfare
Ben. Plan & Trust, 

, 1483 (9th Cir. 1995)
(citing Amato v. Bernard, 

(9th Cir. 1980)).
When the District Court declines to grant an exception to
the application of exhaustion principles, we review for
abuse of discretion. Id.; see also Dishman v. Unum Life Ins.
Co. of Am., Nos. 99-55963, 99-56077, 2001 U.S. App.
LEXIS 22599, at *23 (9th Cir. Oct. 17, 2001); Gallegos v.
Mt. Sinai Med. Ctr., 

, 808 (7th Cir. 2000)
("[T]he intent of Congress is best effectuated by granting
district courts discretion to require administrative
exhaustion."); Springer v. Walmart, 

, 899 (11th
Cir. 1990) ("[T]he decision whether to apply the exhaustion
requirement is committed to the district court's sound
discretion and can be overturned on appeal only if the

                                6
district court has clearly abused its discretion.") (quotation
omitted).6

V.

A. The Legal effect of Stanley Harrow's death on his
claims

1. Survivability of ERISA claims

Because the original named plaintiff has died in the
course of these proceedings, we must consider whether his
ERISA claim survives. Actions that are remedial in nature
generally survive the death of a party. Khan v. Grotnes
Metalforming Sys., Inc., 

, 756-57 (N.D. Ill.
1988). Because Congress intended ERISA to be remedial,
ERISA actions survive death. See 29 U.S.C.S 1001(b) ("It is
hereby declared to be the policy of this chapter to protect
. . . the interests of participants in employee benefit
plans."); see also Duchow v. N.Y. State Teamsters
Conference Pension & Retirement Fund, 

, 78 (2d
Cir. 1982); 

. Therefore, Mrs.
Harrow may pursue her husband's claims.7
_________________________________________________________________

6. We recognize that a "denial of benefits challenged under S
1132(a)(1)(B)
is to be reviewed under a de novo standard unless the benefit plan gives
the administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan." Firestone
Tire
& Rubber Co. v. Bruch, 

, 115 (1989); Pinto v. Reliance
Standard Life Ins. Co., 

, 392-93 (3d Cir. 2000). But
Firestone and its progeny are not applicable here because we do not
reach the issue of whether Prudential's decision to deny Viagra coverage
was proper under the terms of the plan itself. Rather, we consider only
whether the District Court properly required the plaintiff to exhaust
administrative remedies before reviewing a denial of benefits. See Wolf v.
Nat'l Shopmen Pension Fund, 

, 186-87 (3d Cir. 1984)
(applying exhaustion principles before the arbitrary and capricious
standard).

7. When an executor or administrator continues with a decedent's claim,
she "stands in the shoes of the decedent." Kamerman v. Ockap Corp.,

, 196 (S.D.N.Y. 1986); see also Ransom v. Brennan, 

, 516 (5th Cir. 1971); Synder v. Baumecker, 

,
1458 (D.N.J. 1989).

                               7
2. Mootness of Harrow's claims

We must also determine whether an Article III case or
controversy survives Mr. Harrow's death. U.S. Parole
Comm'n v. Geraghty, 

, 395 (1980) (identifying
two aspects of mootness: "[W]hen the issues presented are
no longer `live' or the parties lack a legally cognizable
interest in the outcome.") (quoting Powell v. McCormack,

, 496 (1969)). The mootness issue implicates
our jurisdiction. Steel Co. v. Citizens for a Better Env't, 

, 90 (1998); Chong v. Dist. Dir., I.N.S. , 

,
383 (3d Cir. 2001) ("Inasmuch as mootness would divest us
of jurisdiction to consider this appeal, we are obligated to
address this issue as a threshold matter.") (citing Rogin v.
Bensalem Township, 

, 684 (3d Cir. 1980)).

Mr. Harrow initially asked for injunctive relief,
declaratory relief, and damages. Mrs. Harrow concedes the
claim for injunctive relief is now moot because of her
husband's death. Her claim for declaratory relief is also
moot because Mr. Harrow cannot benefit from a declaration
of Prudential's obligations under the plan. Md. Cas. Co. v.
Pac. Coal & Oil Co., 

, 273 (1941) ("Basically,
the question in each case is whether the facts alleged,
under all the circumstances, show that there is a
substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to
warrant the issuance of a declaratory judgment."). But Mrs.
Harrow still has a claim for damages (i.e., reimbursement of
the $85.99 spent on the Viagra prescription). Therefore,
plaintiff 's damage claim is not extinguished by Mr.
Harrow's death.

B. Summary Judgment was properly granted on
plaintiff 's benefits claim for failure to exhaust
administrative remedies

An ERISA beneficiary may bring a civil action to"recover
benefits due to him under the terms of his plan, to enforce
his rights under the terms of his plan, or to clarify his
rights to future benefits under the terms of the plan . . . ."
29 U.S.C. S 1132(a)(1)(B). "Except in limited circumstances
. . . a federal court will not entertain an ERISA claim unless
the plaintiff has exhausted the remedies available under

                                 8
the plan." Weldon v. Kraft, Inc., 

, 800 (3d Cir.
1990) (citing 

); Zipf v. Am. Tel. & Tel.
Co., 

, 892 (3d Cir. 1986); see also Amato v.
Bernard, 

, 567 (9th Cir. 1980) ("[S]ound policy
requires the application of the exhaustion doctrine in suits
under [ERISA]."). Courts require exhaustion of
administrative remedies "to help reduce the number of
frivolous lawsuits under ERISA; to promote the consistent
treatment of claims for benefits; to provide a nonadversarial
method of claims settlement; and to minimize the costs of
claims settlement for all concerned." Amato , 618 F.2d at
567. Moreover, trustees of an ERISA plan "are granted
broad fiduciary rights and responsibilities under ERISA . . .
and implementation of the exhaustion requirement will
enhance their ability to expertly and efficiently manage
their funds by preventing premature judicial intervention in
their decision-making processes." Id.; see also 

("When a plan participant claims that he or she
has unjustly been denied benefits, it is appropriate to
require participants first to address their complaints to the
fiduciaries to whom Congress, in Section 503, assigned the
primary responsibility for evaluating claims for benefits.").

A plaintiff is excused from exhausting administrative
procedures under ERISA if it would be futile to do so.
Berger v. Edgewater Steel Co., 

, 916 (3d Cir.
1990) ("Although the exhaustion requirement is strictly
enforced, courts have recognized an exception when resort
to the administrative process would be futile."). Plaintiffs
merit waiver of the exhaustion requirement when they
provide a "clear and positive showing of futility." Brown v.
Cont'l Baking Co., 

, 241 (E.D. Pa. 1995);
see also Davenport v. Abrams, Inc., 

, 133 (2d
Cir. 2001) (exhaustion not excused because correspondence
with employer did not amount to an "unambiguous
application for benefits and a formal or informal
administrative decision denying benefits [such that] it is
clear that seeking further administrative review would be
futile") (quotation omitted); Fallick v. Nationwide Mut. Ins.
Co., 

, 419 (6th Cir. 1998) ("A plaintiff must
show that `it is certain that his claim will be denied on
appeal, not merely that he doubts that an appeal will result
in a different decision.' ") (quoting Lindemann v. Mobil Oil

                               9
Corp., 

, 650 (7th Cir. 1996)); Tomczyscyn v.
Teamsters, Local 115 Health & Welfare Fund, 

, 216 (E.D. Pa. 1984) (plaintiffs must demonstrate that
a policy is so fixed that an appeal would serve no purpose);
cf. Scholl v. Qualmed, Inc., 

, 854 (E.D.
Pa. 2000) (dismissing Viagra claim brought under the
Federal Employee Health Benefits Act because futility not
demonstrated where plaintiff was "unhappy" with coverage
limitation, but did not "directly appeal").

Whether to excuse exhaustion on futility grounds rests
upon weighing several factors, including: (1) whether
plaintiff diligently pursued administrative relief; (2) whether
plaintiff acted reasonably in seeking immediate judicial
review under the circumstances; (3) existence of a fixed
policy denying benefits; (4) failure of the insurance
company to comply with its own internal administrative
procedures; and (5) testimony of plan administrators that
any administrative appeal was futile. Of course, all factors
may not weigh equally. See 

;
Metz v. United Counties Bancorp., 

, 383-
84 (D.N.J. 1999) (relying on Berger).

In Berger, we affirmed a finding of futility where the
District Court excused three of four plaintiffs seeking
retirement under a particular pension plan from exhausting
administrative 

. We agreed the
blanket denial of applications for a particular retirement
plan -- and Edgewater's failure to comply with the plan's
administrative procedures -- weighed in favor of concluding
that "any resort by these employees to the administrative
process would have been futile." 

also affirmed
the denial of the futility exception to a fourth plaintiff who
had never asked for the specific type of retirement plan,
holding: "We agree with the district court's conclusion that
because Kier did not request 70/80 retirement, he is
precluded from seeking judicial relief on his claims seeking
to enforce the terms of the Plan." 

Court here
found Mr. Harrow's case to be more like that of the fourth
plaintiff for whom the futility exception was not granted.
The Court also cited to Metz, in which none of the plaintiffs
had filed an application for enhanced benefits as required
under the severance plan. See 

-
84.

                               10
Other courts of appeals have addressed whether the
futility exception applies in circumstances that more closely
mirror our case. These cases involve plaintiffs who, like Mr.
Harrow, have requested plan benefits. Given the policies
underlying the exhaustion requirement, these courts have
been reluctant to grant the exception without clear evidence
of futility. E.g., Bourgeois v. Pension Plan for Employees of
Santa Fe Int'l Corp., 

, 480 (5th Cir. 2000);
Weiner v. Klais & Co., 

, 91 (6th Cir. 1997)
(refusing to excuse exhaustion because plaintiff did not
allege "any factual basis" for his futility claim); 

(denying futility exception where Spanish-
speaking claimants were delinquent in filing an
administrative appeal, even though insurance company's
on-site representative said, "They're not going to pay,"
because court found "record contains nothing but
speculation to suggest that the administrators would have
reached a preconceived result in that respect."); see also
Wilson v. Globe Specialty Prods. 

, 99 (D.
Mass. 2000) (requiring exhaustion where administrator
arguably evidenced an intent to refuse plaintiff 's claim
because court refused to "predict" how administrator would
have decided the claim on review); Kulik v. Metro. Life Ins.
Co., No. 96-1608, 

, at *3 (M.D. Fla. Feb.
25, 1998) (unanswered letter summarizing phone
conversation with plan administrator does not demonstrate
futility because the letter contained no request for
information and no reference to plaintiff 's intent to appeal
denial of his claims).8
_________________________________________________________________

8. Plaintiff relies in part on Sibley-Schreiber v. Oxford Health Plans,
Inc.,

, 988 (E.D.N.Y. 1999) for his contention that the
District Court misapplied the law regarding exhaustion of administrative
remedies. This case is distinguishable on its facts. In Sibley, the
District
Court found "overwhelming evidence" of futility where "numerous
telephone calls were made to defendants in an effort to get an exception
to the [insurance plan's] `no pay' and six pill policies. Plaintiff 's
physician's were required to, and did, submit letters of medical necessity
. . . [r]egardless of the efforts and opinions of plaintiffs' physicians,
defendants consistently denied coverage beyond six pills after that policy
was 

. The Sibley court recognized
"Certainly, an allegation of futility is not satisfied by the mere showing
that a claim was denied when initially presented to the insurance
company." 

Workers of Am. v. Am. Tel. & Tel. Co., 

, 433 (D.C. Cir. 1994)).

                               11
Here, the District Court summarized the evidence as
follows:

       The Harrows did not pursue any action beyond this
       initial [telephonic] inquiry to Prudential . .. . They
       never refilled the prescription for Viagra . . . . In June
       1998, Prudential made public statements that it would
       not cover Viagra. (Cave Dep. At 93). Dr. Lisa Head and
       Anthony Kotin have been deposed on the issue of
       Prudential's appeals process. (Defendant's Exhs. C, D).
       At Dr. Head's deposition, she stated that the fact that
       Prudential's policy was to deny coverage of Viagra
       would not mean that all appeals would be
       automatically denied.

       Q: Under those circumstances, would you expect
       any appeal to be successful?

       A. I would expect that the appeal would go through
       the process that we've outlined in previous
       testimony and that they would be given a fair
       assessment of the information available by that
       committee . . . . I would expect that it would go
       through the process. I don't know that that
       would be upheld in every circumstance.

       (Head Dep. at 62, 63, Defendant's Exh. C). However,
       there is evidence from internal e-mails within
       Prudential that perhaps the policy was more uniform
       than suggested by Dr.'s Head and Kotin. For example,
       one e-mail message stated "I'm carboning others just to
       ensure that we are clear that there is no local authority
       to approve coverage for Viagra even on a single case
       exception basis or for a specific claimant." (Gottsch
       Decl., Exh. I). Finally, there is no evidence that any
       formal appeal from a denial of Viagra coverage was ever
       taken by any person who might arguably be a class
       member.

. Because the Harrows took
no steps beyond an initial telephonic inquiry, the District
Court held that plaintiff did not qualify for the futility
exception. 

no abuse of discretion in the District Court's
refusal to apply the futility exception to the exhaustion

                               12
doctrine. Mr. Harrow made one telephone call to Prudential
before instituting an ERISA suit. Mr. and Mrs. Harrow
reviewed the plan handbook outlining complaint
procedures, but none were filed. The press release
announcing Prudential's general policy of denying coverage
was made at least one month after Mr. Harrow brought
suit. Mrs. Harrow was told to save her receipts in the event
Prudential did cover the drug, suggesting that internal
administrative procedures would not necessarily be futile.
Furthermore, Prudential administrators testified that the
outcome of its internal appeal procedures was not
predetermined, although as the District Court noted, there
was conflicting testimony in this regard. Viewing the facts
and weighing the relevant factors, we agree with the District
Court that a plaintiff in these circumstances was obligated
to do more than make one telephonic inquiry before
instituting suit. In this sense, plaintiff did not act
reasonably.

This case is difficult because at some point in the future
-- in this instance, only a few months -- Prudential
adopted a blanket policy denying coverage for Viagra. But
at the time Mr. Harrow filed suit it was unclear and
uncertain whether Prudential would automatically bar
coverage. More importantly, the Harrows took no action
after the initial phone call to an unidentified person to
press their request. Under this set of facts, the exhaustion
of remedies requirement demands more. For these reasons,
we agree the futility exception does not apply and we will
affirm the District Court's grant of summary judgment on
the benefits claim for failure to exhaust administrative
remedies.

C. Summary Judgment was properly granted on
plaintiff 's breach of fiduciary duty claim

The District Court also dismissed the claim alleging
breach of fiduciary duty for failure to exhaust
administrative remedies. Mrs. Harrow contends the
exhaustion requirement does not apply because she is
asserting statutory rights under ERISA S 404, 29 U.S.C.
S 1104(a).9 But the District Court held that the fiduciary
_________________________________________________________________

9. 29 U.S.C. S 1002(21)(A) states: "a person is a fiduciary with respect
to
a plan to the extent (i) he exercises any discretionary authority or

                               13
duty claim merely recast the benefits claim in statutory
terms and was still subject to the exhaustion doctrine. We
agree.

As noted, courts require exhaustion of administrative
remedies prior to hearing an action for a denial of ERISA
benefits. We apply the exhaustion requirement to ERISA
benefit claims, but not to claims arising from violations of
substantive statutory provisions. 

(administrative exhaustion not required when plaintiff
alleged termination in violation of ERISA S 510); Savage v.
Conn. Gen. Life Ins. Co., No. 96-1709, 1996 U.S. Dist.
LEXIS 11106, at *2 (E.D. Pa. July 31, 1996) ("Where
statutory violations are alleged, a claimant need not
exhaust his/her administrative remedies before seeking
relief in federal court, whereas claims alleging a denial or
requiring a recalculation of benefits must first be submitted
on internal appeal to the plan."), aff 'd , 

(3d
Cir. 1998); Blahuta-Glover v. Cyanamid Long Term Disability
Plan, No. 95-7069, 

, at *13
(E.D. Pa. May 1, 1996).10
_________________________________________________________________

discretionary control respecting management of such plan or exercises
any authority or control respecting management or disposition of its
assets . . . ." Section 1104(a) sets forth a"prudent man standard of care"
for fiduciaries:

       a fiduciary shall discharge his duties with respect to a plan
solely in
       the interest of the participants and beneficiaries and--

       (A) for the exclusive purpose of:

       (i) providing benefits to participants and their beneficiaries; and

       (ii) defraying reasonable expenses of administering the plan; . . .

       (D) in accordance with the documents and instruments governing
       the plan

       . . . .

10. The circuits "are in sharp disagreement" as to whether plaintiffs
must exhaust administrative remedies before bringing an action in
federal court to assert a violation of substantive statutory provisions
like
ERISA S 510 (unlawful termination) and S 404 (breach of fiduciary duty).
Smith v. Sydnor, 

, 364 (4th Cir. 1999). Compare 

                                14
In Zipf, we explained why we do not apply the exhaustion
doctrine to claims arising under substantive provisions like
S 510:

       When a plan participant claims that he or she has
       unjustly been denied benefits, it is appropriate to
       require participants first to address their complaints to
       the fiduciaries to whom Congress, in Section 503,
       assigned the primary responsibility for evaluating
       claims for benefits . . . However, when the claimant's
       position is that his or her federal rights guaranteed by
       ERISA have been violated, these considerations are
       simply inapposite. Unlike a claim for benefits brought
       pursuant to a benefits plan, a Section 510 claim
       asserts a statutory right which plan fiduciaries have no
       expertise in interpreting. Accordingly, one of the
       primary justifications for an exhaustion requirement in
       other contexts, deference to administrative expertise, is
       simply absent. Indeed, there is a strong interest in
       judicial resolution of these claims, for the purpose of
       providing a consistent source of law to help plan
       fiduciaries and participants predict the legality of
       proposed actions.

date, the cases applying the Zipf exception have
primarily fallen in two categories: "(1) discrimination claims
under S 510 of ERISA, or (2) failure to provide plaintiffs
_________________________________________________________________

("[T]he judicially created exhaustion requirement does not apply to a
claim for breach of fiduciary duty as defined in ERISA."); and Horan v.
Kaiser Steel Retirement Plan, 

, 1416 n.1 (9th Cir. 1991)
("The exhaustion requirement applies to plaintiffs' benefits claim, but
does not apply to the plaintiffs' fiduciary breach claim because this
claim
alleges a violation of the statute, ERISA, rather than the Plan."); and
Held v. Manf. Hanover Leasing Corp., 

, 1205 (10th Cir.
1990) (not requiring exhaustion for an unlawful termination claim); with
Perrino v. S. Bell Tel. & Tel. Co., 

, 1316 (11th Cir. 2000)
("We apply this exhaustion requirement to both ERISA claims arising
from the substantive provisions . . . and ERISA claims arising from an
employment . . . agreement."); and Lindemann , 79 F.3d at 650 (stating
District Court has discretion to require exhaustion for ERISA S 510
claim).

                               15
with summary plan descriptions, as required by ERISA."

& n.4 (listing cases). But the
rationale articulated in Zipf is equally applicable to claims
brought under ERISA SS 404-406, 11 U.S.C.S 1104(a), for
breach of fiduciary duty because these claims are also
statutory. See Glenn 

n.7.

Plaintiffs cannot circumvent the exhaustion requirement
by artfully pleading benefit claims as breach of fiduciary
duty claims. Drinkwater v. Metro. Life Ins. Co. , 

, 826 (1st Cir. 1988) (exhaustion doctrine would be
"rendered meaningless" if plaintiffs were allowed to bypass
exhaustion by artfully dressing contract claims in statutory
clothing). When the facts alleged do not present a breach of
fiduciary duty claim that is independent of a claim for
benefits, the exhaustion doctrine still applies. See 

(independent fiduciary duty claim
established where plaintiffs alleged that defendants sold
preferred stock at undervalued prices); 

(discussing applicability of exhaustion where
plaintiffs alleged that plan's failure to notify them in
Spanish was a statutory breach). A claim for breach of
fiduciary duty is "actually a claim for benefits where the
resolution of the claim rests upon an interpretation and
application of an ERISA-regulated plan rather than upon
an interpretation and application of ERISA." 

.11

Here, plaintiff 's complaint states:

       In failing to insure that plaintiff and members of the
       class were furnished with coverage under the Plans for
_________________________________________________________________

11. In Smith, the United States Court of Appeals for the Fourth Circuit
considered the artful pleading problem in the ERISA context. Upon
examining Simmons v. Willcox, 

(5th Cir. 1990) and
Drinkwater the court concluded that plaintiffs were required to exhaust
administrative remedies before bringing a claim for breach of fiduciary
duty in federal court where the basis of the claim is a plan
administrator's denial of benefits or an action by the defendant closely
related to the plaintiff 's claim for benefits, such as the withholding of
information regarding the status of 

("[I]t is
clear that such a claim is a naked attempt to circumvent the exhaustion
requirement.").

                               16
       their Viagra prescriptions, defendants have failed to
       discharge their duties: (a) solely in the interest of the
       Plan participants and beneficiaries and for the
       exclusive purpose of providing benefits to the
       participants and beneficiaries; (b) with the requisite
       care and skill required of ERISA fiduciaries; and (c) in
       accordance with the documents and instruments
       governing the Plan.

.

Given this language, the District Court concluded plaintiff
was recasting a benefits claim in statutory terms as a
means of bypassing the exhaustion requirement. 

in terms of a statute, plaintiff 's claim
is based on the Plan itself and the failure of the defendant
to provide benefits under the Plan."). The District Court
explained:

       [P]laintiff 's breach of duty claim clearly involves some
       legal issues, [but] is premised on the fiduciaries'
       responsibilities under the Plan. This is a topic on
       which the Plan fiduciaries have expertise. In addition,
       this Court believes that a claim for breach of a duty to
       provide benefits should not be brought before giving
       the Plan fiduciaries an opportunity to provide those
       benefits. This could only occur through exhaustion of
       administrative remedies.

that plaintiff is actually challenging a denial of
benefits, and not conduct amounting to a statutory breach
of fiduciary duty. Unlike the plaintiffs in Smith, Mrs.
Harrow does not allege facts that, if proven, establish a
breach of fiduciary duty independent of the denial of
benefits (e.g., selling preferred stock at an undervalued
price). As the District Court observed, the language of the
complaint itself demonstrates that Mrs. Harrow's claim was
actually premised on the plan administrators' failure to
furnish plaintiff with insurance coverage for Viagra.
Furthermore, Mrs. Harrow attempts to bolster her
argument that the fiduciary duty claim is "independent" by
arguing for the first time on appeal that Prudential failed to
issue a written denial of benefits as required under 29

                               17
12. Generally, we do not review issues raised for the first time at the
appellate level, and we do not choose to exercise our discretion to do so
here. Gardiner v. V.I. Water & Power Auth., 

, 646 (3d Cir.
1998).
U.S.C. S 1133(1).12 To be sure, "many employee claims for
plan benefits may implicate statutory requirements
imposed by ERISA . . . [b]ut that prospect does not give a
claimant the license to attach a `statutory violation' sticker
to his or her claim and then to use that label as an
asserted justification for a total failure to pursue the
congressionally mandated internal appeal procedures."

. The Harrows made only one phone
call to Prudential before instituting the present suit and
cannot now excuse their failure to exhaust administrative
remedies by draping a benefits claim in statutory language.

Having concluded that Mrs. Harrow's claim for breach of
fiduciary duty constitutes a recasting of a claim for
benefits, we hold that the District Court properly granted
summary judgment for failure to exhaust administrative
remedies.

VI.

For these reasons, the judgment of the District Court will
be affirmed.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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