Although “the text of ERISA nowhere mentions the exhaustion doctrine,” both “the legislative history and the text of ERISA” make clear that Congress “intend[ed] to grant . . . authority to the courts” to “apply that doctrine in suits arising under ERISA.” See Amato v. Bernard, 618 F.2d 559, 566-67, 569 (9th Cir. 1980) (affirming dismissal of ERISA claim for benefits, where plaintiff had not exhausted administrative remedies available under plan; finding “sound policy requires the application of the exhaustion doctrine in suits under the Act”) . . .
Kaminskiy v. Kimberlite Corp., 2014 U.S. Dist. LEXIS 72061 (D. Cal. 2014)
Two recent cases provide an important reminder that the judicial gloss on ERISA’s claim procedure imposing exhaustion of remedies before filing suit must be carefully considered in any ERISA benefits case. As noted in the excerpt above, the requirement will not be found in the statute so attentive regard to the pertinent case law.
Aside from compliance with the plan’s administrative review and appeal processes, the plaintiff must allege compliance with those procedures in any subsequent federal suit.
Form of Allegation
For example, in Kaminiskiy, the Court stated: “Here, plaintiff alleges she submitted a claim for benefits on August 29, 2013, and that her claim was thereafter denied. Such allegation is insufficient to allege exhaustion of the administrative remedies available under the ESOP.”
So what sort of allegation is required? The allegation need not be complex (although providing factual details is undoubtedly the prudent course). The essential formula according to the Kaminiskiy court reduces to an allegation that “following the denial of her claim for benefits, she submitted a written request for review and that any such request subsequently was denied.”
Exceptions to Requirement
The plaintiff argued that the exhaustion doctrine did not apply to her claims based upon Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. Cal. 1984). That case involved a distinction between claims that arise under the terms of a plan versus claims created by statute.
#1 Where a claim involves a determination of rights granted under the plan document, then internal appeal procedures apply and exhaustion of remedies is required.
#2 On the other hand, if the claim amounts to a challenge that the plan terms or application thereof violate the statute, then “[t]here is no internal appeal procedure either mandated or recommended by ERISA . . . ”
The court rejected the plaintiff’s argument, however, since it found that the plaintiff’s claims were encompassed in situation #1 above and thus exhaustion was required. N.B., please see the circuit split below regarding which courts permit exception #2.