Lacy v. Fulbright & Jaworski

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED APRIL 14, 2005
IN THE UNITED STATES COURT OF APPEALS March 30, 2005

Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk

No. 04-20537

CAROLYN LACY,

Plaintiff-Appellant,

versus

FULBRIGHT & JAWORSKI, Limited
Liability Partnership Long Term
Disability Plan; UNUM LIFE INSURANCE
COMPANY OF AMERICA,

Defendants-Appellees.

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Appeal from the United States District Court
for the Southern District of Texas
(4:03-CV-387)
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Before JONES, WIENER, and CLEMENT, Circuit Judges.

PER CURIAM:

Plaintiff-Appellant Carolyn Lacy appeals the district court’s

summary judgment dismissal of her lawsuit for Long Term Disability

(“LTD”) benefits under an ERISA Plan (“the Plan”) sponsored by her

former employer, Fulbright & Jaworski, LLP (“the law firm”) and

insured by Defendant-Appellee Unum Life Insurance Company of

America (“Unum”). The district court dismissed Lacy’s suit for her

failure to exhaust administrative review rights following denial of
benefits, specifically, her untimely filing of an appeal after Unum

denied her LTD benefits. We affirm.

I. FACTS AND PROCEEDINGS

Lacy’s coverage under the Plan went into effect on February 8,

2000, one year after she started to work for the law firm. On the

effective date of her coverage, Lacy was already under a

physician’s care for congestive heart failure (“CHF”), as treatment

for which her physician had prescribed Coumadin, initially in

January 2000 and again in April that year. In December 2000, Lacy

suffered a cerebra-vascular accident (“CVA”). In June 2001 she

timely filed a claim for LTD benefits under the Plan and Unum’s

policy. After Unum reviewed her medical records, it concluded that

Lacy’s disability was caused, at least in part, by the Coumadin

that she had been taking for her pre-existing CHF. Unum wrote to

Lacy on November 26, 2001, denying LTD benefits (“the denial

notice”).

It is uncontested that Lacy did not seek administrative review

of Unum’s denial of her claim until July 9, 2003, approximately

twenty months after receiving the denial notice. When she finally

sought review, Unum rejected it as untimely, and this litigation

ensued. Unum filed a motion for summary judgment seeking dismissal

of Lacy’s action for failure to exhaust administrative remedies,

i.e., failure to file a timely appeal to the plan administrator

following Unum’s initial denial of benefits. In opposing Unum’s

summary judgment, Lacy contended that the denial notice was

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inadequate under ERISA, excusing her failure to exhaust her

administrative remedies. Specifically, Lacy argued that the denial

notice was legally insufficient to start the running of the period

within which she could file an appeal, thereby making her 2003

appeal timely. Lacy sought to have the district court remand this

matter and direct the plan administrator to consider her appeal

from denial of benefits. The district court held that the denial

notice was sufficient as a matter of law, granted Unum’s motion for

summary judgment, and dismissed Lacy’s action. She timely filed a

notice of appeal.

II. ANALYSIS

A. Issue on Appeal

The sole issue presented is whether the denial notice, which

Lacy admittedly received, was deficient as a matter of law and thus

ineffective to trigger the running of the administrative appeal

period.

B. Standard of Review

When, as here, there are concededly no genuinely disputed

issues of material fact, the parties have filed opposing motions

for summary judgment, and one such motion has been granted on the

basis of a purely legal determination, our review is de novo.1

C. Sufficiency of Denial Notice

1
Fierros v. Tex. Dep’t of Health, 274 F.3d 187, 190 (5th
Cir. 2001).

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 A claimant who is denied benefits under an ERISA plan must

exhaust all administrative remedies afforded by the plan before

instituting litigation for recovery of benefits.2 At least

implicitly conceding that, if the denial notice was effective, her

purported appeal was untimely, Lacy insists that Unum’s denial

notice was legally inadequate. As a result, she argues, her appeal

period never began to run.

When a claim for benefits is denied, the claimant must be

furnished a written notice that sets forth particular information

in a manner that the claimant can understand. Section 1133 of

ERISA specifies:

In accordance with regulations of the Secretary, every
employee benefit plan shall ——
(1) provide adequate notice in writing to any participant
or beneficiary whose claim for benefits under the plan
has been denied, 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 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.3

A Department of Labor (“DOL”) regulation adds a gloss on §

1133(1)’s notice requirement:

(f) Content of notice. A plan administrator or, if (c)
of this section is applicable, the insurance company,
insurance service, or other similar organization, shall
provide to every claimant who is denied a claim for

2
Hager v. NationsBank N.A., 167 F.3d 245, 247 (5th Cir.
1999).
3
29 U.S.C. § 1133.

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 benefits written notice setting forth in a manner
calculated to be understood by the claimant:
(1) The specific reason or reasons for the
denial;
(2) Specific reference to pertinent plan provisions
on which the denial is based;
(3) A description of any additional material or
information necessary for the claimant to perfect
the claim and an explanation of why such material
or information is necessary; and
(4) Appropriate information as to the steps to be
taken if the participant or beneficiary wishes to
submit his or her claim for review.4

Lacy asserts that the content of Unum’s denial notice was deficient

under § 1133 of ERISA and the DOL Reg quoted above. Our careful

study of the denial notice in the context of the statute and the

regulation satisfies us that even if the denial notice were held to

fall short of strict compliance with those requirements, it is

indisputably in substantial compliance.

We have not previously addressed whether, for purposes of

triggering an ERISA appeal period, an initial denial notice that is

in substantial compliance with the statute and the regulation will

suffice. At least seven other federal appeals courts have

addressed this question, however, and each has held that

substantial rather than strict compliance with ERISA § 1133 and DOL

Regulation § 2560.503-1(f) is all that the law requires.5 We join

4
29 C.F.R. § 2560.503-1(f). This regulation has since been
amended. As the amended version applies to claims filed on or
after January 1, 2002, the previous version applies to Lacy’s
claim. See 65 Fed. Reg. 70,246 (Nov. 21, 2000) (revising 29
C.F.R. § 2560.503-1).
5
See Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 108 (2d
Cir. 2003); White v. Aetna Life Ins. Co., 210 F.3d 412, 414 (D.C.

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those courts today and hold that the substantially compliant denial

notice sent to Lacy by Unum triggered the running of her

administrative appeal period.

D. Attorneys’ Fees

In a short paragraph at the conclusion of its brief, Unum

requests an award of attorneys’ fees. Unum did not, however, cross

appeal the district court’s refusal to grant its request for

attorneys’ fees; rather, it now asks us to do so on grounds of a

frivolous appeal. We deny this request as wholly lacking in merit.

III. CONCLUSION

Albeit arguably less than perfect, Unum’s denial notice,

whether read as a whole or parsed as to each particular provision,

is in substantial compliance with the applicable requirements of

ERISA and the DOL’s Regulation. It was thus sufficient for the

purpose of commencing the running of the period within which Lacy

could have submitted an appeal to the plan administrator. This is

particularly evident when it is recognized that the November 26,

2001 letter was an initial denial of benefits and not a denial of

Cir. 2000); Counts v. Am. Gen. Life & Accident Ins. Co., 111 F.3d
105, 108 (11th Cir. 1997); Kinkead v. SW Bell Corp. Sickness &
Accident Disability Benefit Plan, 111 F.3d 67, 69 (8th Cir.
1997); Kent v. United of Omaha Life Ins. Co., 96 F.3d 803, 807-08
(6th Cir. 1996); Sheppard & Enoch Pratt Hosp., Inc. v. Travelers
Ins. Co., 32 F.3d 120, 127 (4th Cir 1994); Halpin v. W.W.
Grainger, Inc., 962 F.2d 685, 690 (7th Cir. 1992). “Courts make
the substantial compliance determination on a case by case basis,
assessing the information provided by the insurer in the context
of the beneficiary’s claim.” White, 210 F.3d at 414 (citing
cases from the Eighth and Seventh Circuits).

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a full and fair hearing on review.6 As the undisputed facts

confirm that Lacy’s appeal was proffered to Unum many months after

the expiration of the appeal period that we today hold was

triggered by the denial notice, she has failed to exhaust her

administrative review remedies. Accordingly, we affirm the

district court’s grant of Unum’s motion for summary judgment

dismissing Lacy’s action. We also deny Unum’s request for

attorneys’ fees on appeal.

AFFIRMED; ATTORNEYS’ FEES DENIED.

6
See Kinkead, 111 F.3d at 69 (holding that, when the appeal
process is adequately described, the initial claim denial “need
not be extensive” to trigger the appeal process, “provided that
it explains the basis for the adverse initial decision
sufficiently to permit the claimant to prepare an informed
request for further review”).

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