LANDYA B. McCAFFERTY, District Judge.
Plaintiff Theresa Fortier, a former doctor at the Dartmouth-Hitchcock Clinic ("DH Clinic"), brings suit alleging that defendants Hartford Life and Accident Insurance Company ("Hartford") and the Dartmouth-Hitchcock Clinic Long Term Disability Plan ("Plan") unlawfully stopped paying long-term disability benefits to which she is entitled. She also alleges that Hartford wrongfully terminated her waiver of premium benefits under her life insurance policy.
The standard of review in an ERISA case differs from that in an ordinary civil case, where summary judgment is designed to screen out cases that raise no trial-worthy issues.
The facts recited in this section are drawn from the parties' joint statement of material facts, which they submitted pursuant to Local Rule 9.4(b),
At all times relevant to this case, Fortier was employed as a physician at the DH Clinic. Through her employment, Fortier was a beneficiary and participant in DH Clinic's Plan, offered through Hartford. The Plan provided both the LTD policy and a life insurance policy. Fortier maintained coverage under both policies throughout her employment.
On May 6, 2009, Fortier stopped working due to a medical condition.
On February 5, 2010, Hartford informed Fortier by letter that her LTD policy required her to apply for Social Security Disability benefits if she anticipated being out of work for 12 months or more. Fortier applied for Social Security benefits and, on April 10, 2011, was awarded benefits effective May 6, 2009.
By letter dated June 1, 2010, Hartford notified Fortier that because of her disability, she qualified for a waiver of premium for her life insurance coverage under the Plan. The letter stated that Fortier's life insurance benefits "will remain in effect without premium payment until date of termination 01/07/2026, provided you remain Disabled as defined by the Policy." Doc. no. 29 at ¶ 11. The letter further stated: "Periodically, we will be requesting updated medical information from you to verify your continued disability, and consequently your continued eligibility for the Waiver of Premium benefit." Admin. Rec. at 159.
In a letter dated September 13, 2011, Hartford notified Fortier that her LTD benefits would terminate on November 1, 2011 because her disability was subject to the LTD policy's "Mental Illness" limitation, which limits LTD benefits to 24 months for disabilities "because of . . . Mental Illness that results from any cause; . . . [or] any condition that may result from Mental Illness." Doc. no. 29 at ¶ 15. The letter stated that Fortier's medical records supported a diagnosis of "Cognitive Disorder NOS," which fell under the Mental Illness policy provision.
By letter dated March 5, 2012, Fortier's counsel requested that Hartford extend the deadline to appeal the adverse benefit determination by 60 days.
By letter dated May 22, 2012, Hartford notified Fortier's counsel that "[b]ased on a complete and thorough review of this file, we have determined that Dr. Fortier is entitled to continued LTD benefits beyond November 1, 2011, subject to all policy provisions and guidelines."
By letter dated July 17, 2013, Hartford notified Fortier's counsel that Hartford would stop paying Fortier LTD benefits on September 13, 2013. The letter read, in relevant part:
On August 10, 2013, Fortier's counsel requested a copy of the claim file from Hartford. On August 19, 2013, Hartford provided the claim file to Fortier's counsel.
By letter dated March 7, 2014, Fortier, through her counsel, appealed Hartford's adverse LTD benefit determination (the "2014 appeal"). Hartford notified Fortier's counsel in a letter dated March 26, 2014, that Fortier's appeal was untimely because it was not submitted within 180 days of her receipt of the July 17, 2013 adverse benefit determination letter.
By letter dated September 23, 2013, Hartford notified Fortier's counsel:
Hartford sent Fortier's counsel follow-up letters on October 10 and November 8, 2013, reminding him that Hartford needed additional information to determine whether Fortier remained under a disability. The letters informed Fortier's counsel that absent further information, her waiver of premium benefits would be terminated.
On December 4, 2013, Hartford notified Fortier's counsel by letter that it had not received any response to its September 23, October 10, or November 8, 2013 letters. Hartford stated in its letter that it was terminating Fortier's waiver of premium benefits as of that date. The December 4 letter also stated: "If you do not agree with the reason why your claim was denied, in whole or part, and you wish to appeal our decision, you must write to us within one hundred eighty (180) days of the date of this letter."
By letter dated June 1, 2014, Fortier's counsel timely appealed Hartford's adverse determination regarding the waiver of premium benefits. In the letter, Fortier's counsel stated that he was including the March 7, 2014 letter appealing Hartford's termination of her LTD benefits, as well as "clinical notes of Dr. Belliveau." Admin. Rec. at 172. The letter also stated "[a]dditional documents will be sent to Hartford soon."
By letter dated June 10, 2014, Hartford acknowledged receipt of the appeal, gave Fortier's counsel the address to send any additional documents, extended the deadline for Fortier's appeal to July 7, 2014 so that he could forward any additional documents, and stated that if Hartford did not receive additional documentation by that date, it would evaluate the appeal based on the information it currently had.
Fortier's counsel did not submit any further documents in connection with Fortier's appeal. By letter dated July 21, 2014, Hartford denied the appeal, noting that it had not received any additional documentation, and that the psychiatric office visit notes from Dr. Belliveau were not sufficient to establish a disability under the Plan.
Fortier brings this suit to recover LTD benefits under her LTD policy (Count I) and waiver of premium benefits under her life insurance policy (Count II). Both counts are brought under ERISA, 29 U.S.C. § 1132. Fortier also seeks attorney's fees and costs (Count IV). The parties cross-move for judgment on the administrative record.
As Fortier states in her motion, "this case ultimately turns on whether Dr. Fortier timely appealed the September 13, 2013 termination and exhausted pre-suit remedies under ERISA." Doc. no. 35 at 9. Thus, unlike most ERISA cases, the court is not reviewing the merits of Fortier's claim that Hartford erred in terminating her benefits. Instead, the court must determine only whether Fortier exhausted her remedies prior to bringing suit.
Under ERISA, every benefit plan must, among other things, "afford reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. § 1133(2). The Secretary of Labor has promulgated regulations for the administrative review of claims for plan benefits.
The regulations further require that the communication of denial of benefits "spell out the specific reasons for an adverse determination, delineate the particular plan provisions on which the determination rests, furnish a description of any additional material necessary to perfect the claim, and provide a description of the plan's review procedures and applicable time limits."
Fortier contends that she exhausted her administrative remedies because she timely appealed Hartford's termination of her LTD benefits in 2013. She further argues that even if she did not submit a timely appeal, her failure to do so should be excused under the substantial compliance doctrine and the notice-prejudice rule. Defendants dispute Fortier's arguments.
"ERISA does not establish the standard of review which courts should apply when reviewing determinations made regarding benefits claims."
Fortier devotes a substantial portion of her brief to arguing that the deferential standard of review should not apply to Hartford's decision to terminate her LTD benefits despite the Plan granting the administrator discretionary authority to determine eligibility for benefits. Defendants argue that the deferential standard of review should apply.
The court need not decide the appropriate standard of review because, as Fortier correctly states, the only issue presented in Count I is whether she exhausted her administrative remedies prior to bringing suit. Because that issue is the basis of Fortier's claim in Count I, "there are no factual findings or interpretations of the Plan made by the Claims Administrator to which this court should defer" and the review is de novo.
In support of her argument that she timely filed her 2014 appeal, Fortier asserts that Hartford did not follow its own internal guidelines regarding termination of LTD benefits. She also contends that the documents submitted with her 2012 appeal, which Hartford retained and which she asserts support her 2014 appeal, render her 2014 appeal timely. Defendants argue that the 2014 appeal was untimely and that Fortier's theories do not excuse her failure to exhaust her administrative remedies.
Fortier contends that Hartford failed to comply with its own guidelines concerning the termination of a beneficiary's LTD claim. She cites the "Denials and Termination" section of Hartford's LTD insurance "Product Manual."
Even assuming the Product Manual is properly before the court, Fortier's argument is without merit.
More importantly, however, even if the Product Manual applies to Fortier's claim, she does not explain how Hartford's failure to follow the cited procedure renders her appeal timely. Fortier does not assert that the Product Manual was a part of the Plan and, thus, it cannot be used to override the Plan's plain language.
In short, Fortier's argument concerning the Product Manual does not support her claim that the 2014 appeal was timely.
Fortier notes that she timely appealed Hartford's initial termination of her LTD benefits in 2012. She asserts that she submitted 613 pages of material in support of the 2012 appeal, and contends that these documents show that she was disabled because of a cognitive disorder due to encephalopathy, which does not fall under the Mental Illness limitation. Fortier states that Hartford never reviewed the documents she submitted with the 2012 appeal and that her submission of those documents in 2012 renders her 2014 appeal timely.
Although framed differently, Fortier raised the issue of her 2012 appeal in her objection to defendants' motion to dismiss. Fortier argued then that the language in the Plan requiring a beneficiary or her representative to "appeal once" before filing an action in court is ambiguous. In rejecting that argument, the court held:
Doc. no. 24 at 14-15. Thus, the court held that the Plan's language unambiguously required Fortier to appeal the September 2013 termination of benefits, even though she had previously appealed the September 2011 termination of benefits.
Fortier appears to argue now that because Hartford had possessed the 613 pages of documents since 2012, the court should deem her 2014 appeal to be timely. In other words, she appears to contend that because she appealed the classification of her disability as subject to the "Mental Illness" limitation back in 2012, and because Hartford neither reviewed the documents she submitted nor ruled on the substantive question raised in that appeal, her 2014 appeal should be considered timely.
The court notes first that Fortier does not contend that the 2011 termination and the 2013 termination of benefits represented a single termination of benefits, and she has consistently described them in her filings as separate adverse benefit determinations.
Fortier argues instead that because the basis of the 2011 termination was the same as the basis for the 2013 termination, her appeal of the former must render her appeal of the latter timely. She offers no support for that theory, however. As the court previously held, the Plan required Fortier to timely appeal her September 2013 termination of benefits. She did not do so. The fact that documents she provided in connection with her 2012 appeal could also have supported her 2014 appeal does not render the latter appeal timely.
Accordingly, Fortier's 2014 appeal of the termination of her LTD benefits was untimely. The court therefore turns to Fortier's arguments that her untimely appeal should be excused.
Fortier argues that even if her 2014 appeal was untimely, the court should hold that she exhausted her administrative remedies because of the substantial compliance doctrine and the notice-prejudice rule. Defendants contend that neither applies in the circumstances of this case.
Fortier cites the "substantial compliance" doctrine, which excuses an insurer's failure to strictly comply with ERISA's notice requirements so long as "the beneficiary [was] supplied with a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear understanding of the administrator's position to permit effective review."
Fortier offers no support for her theory that the substantial compliance doctrine, which applies to insurers and plan administrators, should be extended to excuse a beneficiary's failure to timely appeal an adverse benefits determination. Indeed, the only case Fortier cites that considered the issue rejected the argument that the substantial compliance doctrine should apply to claimants.
Fortier argues that Hartford cannot demonstrate that it was prejudiced by her late appeal and, therefore, her failure to exhaust her administrative remedies should be excused. In support of this argument, Fortier relies on the notice-prejudice rule, a doctrine recognized in some states that requires an insurer to demonstrate prejudice before it can deny insurance coverage solely on the basis that the insured's claim was untimely.
As was discussed in the court's order on defendants' motion to dismiss, in states that recognize the notice-prejudice rule, the rule applies to save untimely
Fortier makes several arguments in support of the application of the notice-prejudice rule to untimely ERISA appeals in this case. She argues: 1) unlike many other states in which courts have held that the notice-prejudice rule does not apply to ERISA appeals, New Hampshire's notice-prejudice rule is a product of common law, not a creature of statute; 2) no New Hampshire cases expressly limit the notice-prejudice rule to liability policies; and 3) to not apply the rule here would perpetuate an "artificial distinction" between the initial denial of claims and the denial of appeals. The court addresses each argument in turn.
Fortier first argues that New Hampshire's common law notice-prejudice rule is different from the rules derived from state statutes that several courts have held do not apply to untimely ERISA appeals.
Fortier next argues that no New Hampshire cases expressly limit the notice-prejudice rule to liability policies. As Fortier notes, New Hampshire's notice-prejudice rule has been applied only to occurrence-based coverage in the liability insurance context.
Fortier asserts nevertheless that New Hampshire's notice-prejudice rule is not limited to the occurrence-based, liability insurance context and can be extended to ERISA exhaustion. She argues that although New Hampshire's notice-prejudice rule has been applied only in the occurrence-based, liability insurance context, no New Hampshire case has expressly limited its application to that context. That argument, by itself, is not persuasive.
Fortier also attempts to analogize ERISA appeals to uninsured motorist coverage, an area where New Hampshire courts have applied the notice-prejudice rule. Other than stating that both involve the evaluation of medical records, however, Fortier offers no argument in favor of her uninsured motorist coverage analogy. Without more, the court does not see how the application of the notice-prejudice rule to uninsured motorist coverage supports extending the rule to untimely ERISA appeals.
Fortier's final argument is that the rationale behind the notice-prejudice rule supports applying it to untimely ERISA appeals, and that not applying it here would perpetuate an "artificial distinction" between the initial denial of claims and the denial of appeals. Doc. no. 37 at 2.
The difference between initial claims and appeals is more than a mere arbitrary designation. ERISA mandates claims procedures and processes to effectuate certain policies:
Every court that has substantively addressed the issue has held that the notice-prejudice rule does not apply to the denial of an untimely ERISA appeal. Fortier has not shown that New Hampshire law supports a different result. In light of the justifications for ERISA's administrative exhaustion requirement, the court sees no basis on which to extend the notice-prejudice rule beyond its current limits in the ERISA context.
In her reply, Fortier raises for the first time the argument that the court should excuse her failure to timely appeal in 2014 because her appeal would have been futile. Although a party generally cannot raise or develop arguments for the first time in a reply,
Futility is an exception to ERISA's exhaustion requirement. An employee is not required to exhaust her administrative remedies in those instances where it would be futile for her to do so.
Fortier's argument appears to be that her appeal would have been futile because Hartford did not look at the medical documents she submitted in connection with her 2012 appeal. But, in response to the 2012 appeal, Hartford reinstated Fortier's benefits based on its review of her record and its own determination that it had not properly calculated the beginning point for the benefits period. Fortier's attempt to draw a negative inference from her successful 2012 appeal is misplaced. The record does not show that Hartford would have denied a timely appeal in 2014.
As a result, Fortier has not met her burden of showing the doctrine of futility applies to excuse her from exhausting her administrative remedies.
The court is not unsympathetic to Fortier's situation. The administrative record, however, shows that she did not timely appeal Hartford's decision to terminate her LTD benefits and thus failed to exhaust her administrative remedies. Neither the substantial compliance doctrine nor the notice-prejudice rule operates to excuse that failure. For these reasons, defendants are entitled to judgment on Count I.
In her amended complaint, Fortier alleges in support of Count II that Hartford's "decision to terminate life insurance coverage was not supported by substantial evidence [and] was wrongful and not in compliance with applicable laws." Doc. no. 13 at ¶ 13. Other than one stray sentence in her motion for judgment on the administrative record, however, Fortier makes no mention of her claim for waiver of premium benefits. She also does not respond in her reply to Hartford's assertion that she appears to have abandoned her claim in Count II. At oral argument, Fortier asserted that she was not abandoning her claim in Count II, though she could not articulate an argument in support of that claim.
The facts underlying Hartford's decision to terminate Fortier's waiver of premium benefits under the life insurance policy are not in dispute. Despite Hartford's several requests, Fortier failed to provide information from her doctors to allow Hartford to evaluate her disability. Although Fortier timely appealed the termination of her waiver of premium benefits, she provided minimal medical records, and did not provide any additional information, despite stating that she would do so. Fortier does not explain how these facts could give rise to an ERISA claim.
Accordingly, defendants are entitled to judgment on Count II.
In Count IV, Fortier seeks attorney's fees and costs under 29 U.S.C. § 1132(g). That statute provides: "In any action under this subchapter (other than an action described in paragraph (2)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." Because defendants are entitled to judgment on both of Fortier's ERISA claims, Fortier is not entitled to fees and costs.
For the foregoing reasons, plaintiff's motion for judgment on the administrative record (doc. no. 34) is denied. Defendants' motion for judgment on the administrative record (doc. no. 36) is granted. The clerk of court shall enter judgment accordingly and close the case.
SO ORDERED.
