Dec 14, 2017

You Don't Always Have To Exhaust


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3/29/2009
Brian S. King
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Durand v. Hanover Ins. Group, ___ F.3d ___, 2009 U.S. App. LEXIS 5749 (6th Cir. 2009), demonstrates limits to the obligation to exhaust pre-litigation appeals before bringing a suit for wrongly denied ERISA benefits. The case involves a pension plan participant’s challenge to the plan’s method of calculating lump sum benefits. The trial court dismissed the case because the plaintiff failed to exhaust her pre-litigation appeal obligations. The Sixth Circuit reversed.

While exhaustion of pre-litigation appeals is required for ERISA’s run-of-the-mill benefit denial claims, this case holds that challenges to a plan fiduciary’s interpretation of statute or the legality of actions administering the plan do not require the plaintiff to exhaust pre-litigation appeals. Interpretation of statute is purely within the authority of the judiciary. In addition, requiring plaintiffs to ask ERISA plan administrators to ignore the language of the plan terms because they are written in a way that violates the statute is futile. Likewise, to expect plan fiduciaries to judge the legality of their own actions is unreasonable. In these situations, plan participants and beneficiaries may bring their suits directly to federal court without exhausting "administrative" remedies.

The court’s rationale is closely related to the idea that language of a plan document granting discretion to a plan administrator does not insulate that person or entity from plenary, de novo review by a court when a plaintiff challenges the legality of the plan fiduciary’s action or its interpretation of ERISA's legal requirements.



Category: General


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