United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 20, 2000 Decided May 12, 2000
No. 99-7169
Juanita White,
Appellant
v.
Aetna Life Insurance Company and
Aetna US Healthcare,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 97cv02676)
David R. Levinson argued the cause and filed the briefs for
appellant.
Anthony W. Kraus argued the cause and filed the brief for
appellees.
Before: Sentelle, Tatel and Garland, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Tatel, Circuit Judge: Suffering from severe arthritis and
unable to perform her job as a nurse, appellant applied for
long-term disability benefits pursuant to a plan funded and
administered by appellee Aetna Life Insurance Company.
Through a computer-generated form letter, Aetna informed
appellant that it had denied her claim because of a "lack of
sufficient clinical information." The denial notice also in-
formed appellant that she had to submit any appeal to Aetna
within sixty days, but appellant's attorney filed her appeal
three months late. Citing this untimeliness, Aetna refused to
consider the appeal and reaffirmed its denial of long-term
disability benefits. Because we find that Aetna violated the
Employee Retirement Income Security Act and its imple-
menting regulations by failing to inform appellant of an
important reason for denying her claim, its denial notice did
not trigger the sixty-day appeal deadline. We therefore
reverse the district court's grant of summary judgment for
Aetna and remand with instructions to direct Aetna to consid-
er the merits of appellant's appeal.
I
The Employee Retirement Income Security Act of 1974, 29
U.S.C. ss 1001-1461, prescribes requirements for the notice
that insurers must give claimants when denying their claims:
[E]very employee benefit plan shall--
(1) provide adequate notice in writing to any participant
or beneficiary whose claims for benefits under the plan
has been denied, setting forth the specific reasons for
such denial, written in a manner calculated to be under-
stood 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.
Id. s 1133. Department of Labor regulations elaborate on
the information that insurance companies must provide:
[The insurance company] shall provide to every claimant
who is denied a claim for 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 informa-
tion 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.
29 C.F.R. s 2560.503-1(f).
Along with our sister circuits, we have adopted the "sub-
stantial compliance" test to determine whether denial notices
comply with section 1133 and the regulation. See Heller v.
Fortis Benefits Ins. Co., 142 F.3d 487, 493 (D.C. Cir. 1998).
Technical noncompliance will be excused as long as the notice
substantially complies with the statute and regulation. See
id. In assessing whether a notice substantially complies, we
consider not just the notice itself, but all communications
between the insurance company and the claimant. See id.
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. See, e.g.,
Kinkead v. Southwestern Bell Corp., 111 F.3d 67, 69 (8th Cir.
1997); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 382
(7th Cir. 1992). Heller is typical:
[A]lthough the initial letter from [the insurer] informing
[the claimant] of the denial of her disability benefits did
not conform to the requirements of the regulations, "the
procedures, when viewed in light of the myriad communi-
cations between claimant, her counsel and the insurer,
[appear] sufficient to meet the purposes of Section 1133
in insuring that the claimant understood the reasons for
the denial of [her benefits] as well as her right to review
of the decision."
142 F.3d at 493 (quoting Kent v. United Omaha Life Ins. Co.,
96 F.3d 803, 807 (6th Cir. 1996)).
With this background in mind, we turn to the facts of this
case. A registered nurse, appellant Juanita White worked for
the Washington Hospital Center for twenty-two years. Se-
vere pain in the right hip and knees caused by worsening
arthritis forced her to stop working in June 1996.
White applied for short-term disability benefits under
Washington Hospital Center's Group Benefits Plan. Funded
by the hospital center, the short-term disability plan was
administered by appellee Aetna Life Insurance Company.
Aetna certified White as disabled, and White received short-
term disability benefits through December 1996.
Aetna based its short-term disability certification on a
report by a physician in the office of Dr. C. Anderson Engh,
an orthopedic surgeon. According to that report, a physical
examination of White conducted in August 1996 indicated
end-stage degenerative osteoarthritis of the right hip and
knees. The examining physician concluded that White was
"unable to do a job that required standing at this time" and
recommended hip replacement surgery.
Informed in December 1996 that her short-term disability
benefits would run out at the end of the month, White applied
for long-term benefits under a Washington Hospital Center
plan both administered and funded by Aetna. White submit-
ted a leave of absence certificate from Dr. Engh in support of
her application. In a section of the form titled "Serious
Health Condition," Dr. Engh checked "chronic condition re-
quiring treatments." In a handwritten comment, he de-
scribed his diagnosis as "osteoarthritis," adding that White
would require hip replacement surgery. In a section titled
"Work Schedule," Dr. Engh checked "Intermittent/Reduced
Schedule."
On January 8, 1997, Aetna claims representative Donna
Hucks informed White that her claim had been denied. Ac-
cording to White, Hucks gave three reasons for the denial:
Hucks "had not been able to contact White's orthopedic
surgeon over a three day period, [ ] White's internist had
refused to confirm that White was disabled to work, and [ ]
White should have already undergone hip replacement sur-
gery." White asked Hucks for written confirmation of the
denial, but received none.
By letter dated February 26, 1997, White's attorney ad-
vised Aetna that the hip replacement surgery was scheduled
for April 1 and asked that her claim be reconsidered. The
attorney attached two documents: a copy of Dr. Engh's
certificate and the more detailed report that Dr. Engh's office
had prepared in August.
Aetna sent White a written denial dated March 13, 1997. A
computer-generated form, the denial stated: "Your request
for an extension of your period of disability has been re-
viewed by an Aetna medical director. Due to the lack of
sufficient clinical information to support your request, your
period of disability could not be recertified." The back of the
form described the procedure for appealing the denial:
You are entitled to a review of this Certification Decision
if you do not agree. To obtain a review, you or your
representative should submit a written request. Your
written request should include the Sponsor (e.g., Em-
ployer), your name, Social Security Number and other
identifying information shown on the front of this notice,
and the issue, comments or additional medical informa-
tion you would like to have considered. You may also
ask for copies of documents pertinent to your request.
The written request must contain the information de-
scribed above and must be mailed for delivery within 60
days following receipt of this notice.
At about the same time Aetna sent the notice, Hucks called
White's attorney to advise him of the written denial. She
explained that one of the reasons for the denial was the lapse
in time between the August physical examination and the
April surgery. The attorney asked her to send him a copy of
the notice, but she refused. White recalls receiving the
notice and forwarding a copy to the attorney before her April
1 surgery. The attorney recalls receiving the notice in early
May, attributing the delay to the fact that he had moved his
office.
Almost three months after the sixty-day appeal deadline,
White's attorney formally appealed the denial of benefits in a
letter addressed to Hucks dated August 12, 1997. The letter
stated: "I apologize for my delay in providing this material,
but Aetna's failure to send a copy of its last determination to
me caused a significant delay to my handling of this matter."
As to the merits of White's claim, the letter explained: "You
had advised me in a telephone conversation that you were
concerned about the lapse of time between Dr. Engh's August
28, 1996 exam leading to his recommendation for hip surgery
and the actual surgery on April 1, 1997. I asked Dr. Costecu
[White's internist] to address the medical reasons for the
timing of the operation." Attached was a letter from Dr.
Costecu explaining that White's "blood pressure was not
sufficiently under control to clear her for surgery" before
April. Dr. Costecu added that in her opinion, White was
disabled. Also attached was an updated medical report from
Dr. Engh: "The severity of her arthritis is such that she is
completely disabled and unable to perform her normal work.
I do not feel that she will be at any point in the future ever
able to perform her work as an RN on a Geriatric Inpatient
Ward of an acute care hospital." Aetna denied White's
request for review, explaining that "the request is well be-
yond the 60 day appeal period."
White filed suit in the United States District Court for the
District of Columbia, challenging Aetna's refusal to consider
her appeal and claiming that Aetna's initial denial notice
failed to comply substantially with ERISA and its regulations.
Granting summary judgment for Aetna, the district court
found that Aetna's March 13 denial notice, together with
Hucks' oral communications with White and her attorney,
substantially complied with ERISA and its regulations.
White v. Aetna Life Ins. Co., No. 97-2676, Mem. Op. (D.D.C.
Aug. 10, 1999). The district court thus found no basis for
excusing White's late appeal. We review the district court's
order de novo. See, e.g., Cones v. Shalala, 199 F.3d 512, 516
(D.C. Cir. 2000).
II
If this case turned on whether White's lawyer had a
legitimate reason for failing to file the appeal on time, Aetna
would win easily. The lawyer blames the delay on Hucks for
failing to send him a copy of the March 13 denial notice (the
regulations do not require her to have done so), on Aetna for
sending the notice to White just before she went into the
hospital, and on the post office for forwarding the notice too
slowly. Yet notwithstanding these problems, the record
shows that Hucks told the lawyer that she was sending the
notice to White and that White forwarded it to him before her
surgery. The lawyer, moreover, never claims that he did not
receive the notice until after the appeal deadline. Instead, he
tells us that he would have filed earlier than August 12 if only
Aetna had given more specific reasons for denying the claim.
Perhaps. But nothing prevented the lawyer from either
filing a cautionary notice of appeal or seeking an extension of
time from Aetna.
From these facts, we can draw but one conclusion: the
attorney failed to perform a primary obligation to his client--
filing a timely notice of appeal. Fortunately for White, this
case is not so simple. If Aetna's March 13 denial notice,
supplemented by Hucks' conversations with White and the
lawyer, failed to comply substantially with section 1133 and
its implementing regulations, then the sixty-day appeal period
would not have begun to run, and the lawyer's failure to file a
timely appeal could not have served as a legitimate basis for
Aetna's refusal to consider the claim. See Counts v. Ameri-
can General Life and Accident Ins. Co., 111 F.3d 105, 108
(11th Cir. 1997) ("The consequence of an inadequate benefits
termination letter is that the normal time limits for adminis-
trative appeal may not be enforced against the claimant.").
We therefore turn to the question of Aetna's substantial
compliance.
The March 13 notice and Hucks' various conversations with
White and the attorney identified three reasons for denying
White's claim: Hucks could not reach Dr. Engh (January 8
phone call with White); White failed to provide "sufficient
clinical information" (March 13 denial notice); and White had
offered no reason for the lapse in time between the August
1996 examination and the April 1997 surgery (January 8
phone call with White and March phone call with White's
attorney). White's complaint alleges that Hucks gave a
fourth reason: that Dr. Costecu, White's internist, declined to
certify her as disabled. But because Aetna's answer denies
that particular allegation and because neither party presses it
here, we need not consider it.
Aetna claims that the three reasons given in the March 13
notice and in Hucks' various conversations satisfied its obli-
gation to provide "[t]he specific reason or reasons for the
denial." 29 C.F.R. s 2560.503-1(f)(1). White argues that we
can only consider the particular reason that Aetna communi-
cated in writing--that she failed to provide "sufficient clinical
information"--but Heller holds that oral communications
must also be considered in determining substantial compli-
ance. Heller, 142 F.3d at 493.
Had the three reasons been the only basis for denying
White's claim, we think Aetna probably would have substan-
tially complied with both ERISA and the underlying regula-
tion. Even if, as White argues, "lack of sufficient clinical
information" is too general to be considered "specific" within
the meaning of the statute, the third reason--the lapse of
time between diagnosis and surgery--is not only specific, but
according to Aetna's brief, the primary reason for having
denied the claim. To be sure, Aetna failed to provide a
"[s]pecific reference to pertinent plan provisions on which the
denial is based," as required by subparagraph two of the
regulation, and "[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," as required by subparagraph three 29 C.F.R.
s 2560.503-1(f)(2), (3). But where, as here, the reason for
denial has no connection to any particular plan provision,
failure to reference a specific provision seems just the type of
technical noncompliance that the substantial compliance test
excuses. While failure to describe additional material needed
to perfect the claim might otherwise have represented a
significant omission, in this case Aetna's stated reason for
denial made clear precisely the information White needed to
provide: an explanation of the delay between the August
examination and the April surgery. We thus think that were
this the entire story, Aetna's communications would have
substantially complied with ERISA and the regulation. The
communications were " 'sufficient to meet the purposes of
Section 1133 in insuring that the claimant understood the
reasons for the denial of [her benefits].' " Heller, 142 F.3d at
493 (quoting Kent, 96 F.3d at 807).
There is more to this case, however. In addition to the
three reasons mentioned in the March 13 denial notice and
Hucks' phone calls, the record reveals that Aetna's denial
rested on a fourth reason. Aetna's statement of material
facts as to which there is no genuine issue says this: "Aetna's
concern was compounded by the fact ... that Dr. Engh had
refused to certify White as disabled...." Scouring the rec-
ord, we can find no evidence that Aetna ever communicated
this reason to either White or her lawyer. At oral argument,
Aetna's counsel conceded that he too knew of no such evi-
dence.
Aetna argues that, even given its failure to communicate its
fourth reason, its notice and Hucks' communications with
White and her lawyer substantially complied with the regula-
tions. We disagree. Not telling White that her claim had
been denied in part because Dr. Engh had failed to certify
her as disabled amounts to a major omission. Based on the
information Aetna conveyed through the March 13 notice and
Hucks' phone calls, neither White nor her attorney had any
way of knowing that to perfect the claim, White needed to get
Dr. Engh to certify her as disabled. Indeed, Aetna's counsel
conceded at oral argument that even if White had submitted
documentation responding to Aetna's stated reasons for deny-
ing her claim, Aetna likely would not have approved the claim
absent a disability certification by Dr. Engh. Put simply,
Aetna failed to give White a "specific reason" for denying her
claim and failed to tell her the "additional material or infor-
mation necessary ... to perfect the claim," hardly substantial
compliance with the statute and regulation. 29 U.S.C.
s 1133(1); 29 C.F.R. s 2560.503-1(f)(1), (3).
Urging yet another justification for its refusal to consider
White's claim, Aetna argues that White failed to show that
she was prejudiced by the notice's deficiencies, i.e., that the
deficiencies caused her to file an untimely appeal. Aetna
wants not just one, but two escape hatches from ERISA's
requirements: one for insubstantial omissions and another for
omissions that are not prejudicial. We think one is enough.
To begin with, we are not at all sure how Aetna's prejudice
defense can be reconciled with Heller. Indeed, under Aetna's
theory, we would have no need at all for a substantial
compliance test because no deficiency--substantial or other-
wise--would relieve a claimant of the obligation to appeal
within sixty days unless the deficiency actually caused the
claimant to miss the deadline. The following notice would
probably be acceptable: "Please be advised that your claim
for disability benefits is denied. You have sixty days to
appeal." Insurers would not have to include any specific
reason for the rejection (subparagraph one of the regulation),
nor give citations to relevant plan provisions (subparagraph
two), nor describe additional information needed to perfect
the claim (subparagraph three). As we understand Aetna's
argument, as long as the notice describes how and when to
appeal (subparagraph four), the absence of other information
required by the regulation likely would not prejudice a claim-
ant's ability to file a timely appeal. No doubt this would have
been one way to run a claims procedure. But Congress and
the Labor Department chose a different procedure, one that
requires insurance companies to give claimants specific rea-
sons for denying benefits, to cite relevant plan provisions, to
specify additional information needed, and to describe how to
appeal. Heller, moreover, requires substantial compliance
with these obligations.
The cases Aetna relies on to support its prejudice test, see,
e.g., Ellis v. Metropolitan Life Ins. Co., 126 F.3d 228, 238 (4th
Cir. 1997); Recupero v. New England Tel. and Tel. Co., 118
F.3d 820, 840 (1st Cir. 1997), differ from this case in a critical
respect. All involved challenges to initial denial notices
where insurers thereafter had evaluated claimants' appeals on
the merits; here Aetna failed even to consider the merits of
White's appeal. Where claimants receive "a full and fair
review ... of the decision denying the claim," 29 U.S.C.
s 1133(2), perhaps it does make sense to require them to
show that they were in fact prejudiced by deficiencies in the
initial denial notice before restarting the review process.
Otherwise, as the Sixth Circuit pointed out, "remand ...
would represent a useless formality." Kent, 96 F.3d at 807.
Not so here. White's claim may well have merit: both Dr.
Engh and White's internist found her to be totally disabled.
Under these circumstances, remand would hardly be a use-
less formality.
Aetna's remaining arguments require little discussion. Cit-
ing Kinkead v. Southwestern Bell Corp., 111 F.3d 67 (8th Cir.
1997), Aetna claims that an initial denial notice "need only
state a general reason for the claim denial and explain the
procedure for appeal to trigger the requirements of proper
exhaustion of the appeals process"; only final denial notices,
Aetna argues, need be specific. Aetna's reliance on Kinkead
is misplaced. Kinkead considered whether a notice informing
the claimant that "medical evidence does not substantiate you
were disabled" satisfied the insurance company's obligation
under the regulation to provide the "specific reason." Id. at
69. In this case, Aetna failed entirely to communicate to
White an important reason for denying her claim. So even if
correct, Kinkead has nothing at all to do with this case.
Aetna argues that failure to communicate an important
reason for denying a claim has no consequence beyond estop-
ping the insurer from relying on that reason in considering a
claimant's appeal. Because Aetna did not raise this claim
until oral argument, however, we need not address it. See,
e.g., Galvan v. Federal Prison Industries, Inc., 199 F.3d 461,
468 (D.C. Cir. 1999).
We conclude with a final observation. As this case well
demonstrates, although insurance companies are protected by
Heller's substantial compliance test, they could avoid expen-
sive litigation for themselves and claimants and conserve
judicial resources by strictly complying with the Labor De-
partment's regulations. In view of Heller and the decision we
reach today, it would be in the best interest of all concerned
for insurers to disclose in writing all information required by
the regulations.
III
For all of these reasons, Aetna's March 13 notice, together
with Hucks' conversations with both White and her attorney,
did not substantially comply with ERISA and its regulations.
Because the sixty-day appeal deadline thus never began to
run, we reverse the district court's grant of summary judg-
ment and remand with instructions to direct Aetna to consid-
er the merits of White's appeal.
So ordered.