Wiley v. Prudential Insurance Company of America , 201 F. Supp. 3d 176 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
)
Jeralyn Wiley, )
)
Plaintiff, )
)
v. ) Civil No. 16-cv-00391 (APM)
)
The Prudential Insurance Company of America, )
et al., )
)
Defendants. )
_________________________________________ )
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
In May 2015, Plaintiff Jeralyn Wiley, who was then an employee of Defendant Ernst &
Young US LLP, applied for short-term and long-term disability benefits under her employer’s
disability plans. Defendant Prudential Insurance Company of America, the claims administrator,
approved Plaintiff’s application for short-term disability benefits, but only through June 9, 2015.
Six months later, on December 14, 2015, Plaintiff timely filed an appeal of Prudential’s decision.
Instead of processing the appeal, however, Prudential repeatedly set new deadlines—each time on
its own initiative—giving Plaintiff extra time in which to submit additional documents to support
her appeal. When Prudential still had not ruled on her appeal as of late February 2016, Plaintiff
filed suit against Prudential, alleging a violation of the Employee Retirement Insurance Security
Act (ERISA), 29 U.S.C. §§ 1001 et seq.
Defendants have moved to dismiss this action on the ground that Plaintiff failed to exhaust
her administrative remedies before filing suit. Specifically, Defendants argue that because
Prudential has not yet ruled on Plaintiff’s appeal, Plaintiff filed this action prematurely. The court,
however, does not agree. Prudential granted itself extensions of time that neither were requested
by Plaintiff nor permitted under the applicable ERISA regulations. As a result, Prudential did not
timely rule on Plaintiff’s appeal. The court therefore finds that Plaintiff’s ERISA claim has been
exhausted and that her suit is properly before this court. Accordingly, the court denies Defendants’
Motion to Dismiss.
II. BACKGROUND
Plaintiff Jeralyn Wiley formerly worked at Defendant Ernst & Young US LLP. Compl.,
ECF No. 1, ¶ 13. During her time there, Ernst & Young sponsored both short-term disability and
long-term disability plans (collectively, “Plans”) for its employees. Id. ¶¶ 6-11; see generally
Defs.’ Statement of P. & A. in Supp. of their Mot. to Dismiss, ECF No. 7-1 [hereinafter Defs.’
Mot.], Ex. A, ECF No. 7-3 [hereinafter Ex. A]; see generally Defs.’ Mot., Ex. B, ECF No. 7-4
[hereinafter Ex. B]. Defendant Prudential Insurance Company of America was the claims
administrator for both Plans. Compl. ¶¶ 7-8; see generally Exs. A-B. As such, it had the authority
to determine an employee’s eligibility for disability benefits. Compl. ¶ 8.
Plaintiff was a participant under both Plans. Id. ¶ 6; Defs.’ Mot. at 5. She suffers from a
series of conditions, including, but not limited to, fibromyalgia, limb paresthesia, and myositis.
Compl. ¶ 12; Defs.’ Mot. at 5. In May 2015, Plaintiff applied for short-term disability benefits.
Defs.’ Mot., Ex. C, ECF No. 7-5 [hereinafter Ex. C], at 1.1 On June 17, 2015, Prudential
retroactively approved Plaintiff for benefits through June 9, 2015, but denied her any benefits
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Plaintiff later also applied for long-term disability benefits. Pl.’s Opp’n to Defs.’ Mot. to Dismiss, ECF No. 8, Ex. 1,
ECF No. 8-1, at 1. Prudential advised Plaintiff that it would review her eligibility for long-term disability benefits
concurrent with its review of her appeal of her short-term disability decision. Id. at 3. Because Prudential never ruled
on Plaintiff’s short-term disability appeal, however, it also apparently never reached a decision on Plaintiff’s long-
term disability claim.
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beyond that date. Id. Prudential further informed Plaintiff that she had 180 days from her receipt
of the denial letter to file an appeal. Id. at 2.
By letter dated June 26, 2015, Plaintiff asked Prudential to “review” the “denial of [her]
claim for ongoing benefits.” Id. at 4. “However,” she added, “I request that [Prudential] not
complete its review of this denial until such time as I have been afforded the opportunity to
supplement the record.” Id. She asked Prudential to “advise [me] of the last date by which
[Prudential] will accept additional materials prior to commencing its review of my claim,” but
stated that, “[w]hile I fully intend to supplement my record on appeal, if you have not received
additional materials by such date, please proceed to complete your review.” Id. Plaintiff further
requested that Prudential disclose to her a host of documents relevant to her benefits determination.
Id.
Three weeks later, on July 17, 2015, Prudential responded to Plaintiff: “Your letter
indicates that the appeal is not complete at this time and that you intend on submitting additional
documentation for our evaluation of your appeal. As such, we have not initiated our appeal review
at this time.” Id. at 7. Prudential advised Plaintiff that her “complete appeal must be received by
Prudential no later than December 14, 2015.” Id.
Several months later, Plaintiff retained Scott B. Elkind as her counsel. Comp. ¶ 17. On
November 17, 2015, Elkind wrote to Prudential requesting certain documents relating to
Prudential’s benefits determination, including the claim file. Ex. C at 10-11. He also requested a
minimum 60-day extension of time, starting from the date he received the claim file, in which to
review the documents and then supplement Plaintiff’s appeal. Id. at 12.
On December 1, 2015, Prudential denied Elkind’s requested extension. Id. at 15. It
advised Elkind: “The information in [the] file indicates that the 180 day appeal timeframe expires
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on or about December 14, 2015. As a result, [Plaintiff’s] complete appeal submission must be
received by that date. We will proceed with our review of the appeal at that time based on the
information that has been submitted.” Id.; see also id. at 13-14 (letter from Prudential to Elkind
dated November 23, 2015, identifying December 14, 2015, as the deadline and the date by which
Prudential would proceed with its “review of the appeal . . . based on the information that has been
submitted”).
As Prudential had directed, on December 14, 2015, Elkind timely submitted certain—
concededly not all—documents in support of his client’s appeal. Compl. ¶ 18 (stating that
Plaintiff’s appeal included “additional medical, functional and vocational evidence, but lacked
certain materials due to the hard deadline Prudential gave Plaintiff”); Pl.’s Opp’n to Defs.’ Mot.
to Dismiss, ECF No. 8 [hereinafter Pl.’s Opp’n], Ex. 1, ECF No. 8-1 [hereinafter Ex. 1], at 4 (letter
showing that Elkind submitted nearly 300 documents on Plaintiff’s behalf). Several days later, on
December 17, 2015, Prudential informed Elkind that it would not review Plaintiff’s appeal until
December 28, 2015, because it had not previously calculated into the deadline a 14-day grace
period allowed for mailing delays. Ex. C at 16. Elkind immediately questioned Prudential’s two-
week delay in commencing its review of Plaintiff’s appeal. See id. at 17. He nevertheless
submitted additional documents on December 18, 2015, and stated that he would provide
Prudential “with documents as they are received by [me].” Id. at 18-19.
Prudential—unasked—twice more extended the time in which Plaintiff could submit
additional records in support of her appeal. On December 29, 2015, Prudential told Elkind: “You
have reported you will be submitting additional information in support of Ms. Wiley’s appeal.
Please ensure this information is provided to us within 45 days or by February 10, 2016.” Id. at
21. Elkind continued to provide additional materials through February 2, 2016. Id. at 23, 26-31.
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He also continued to object to Prudential’s delay in commencing review of Plaintiff’s application.
Id. at 24, 33.
On February 10, 2016, Prudential again informed Elkind that it was extending Plaintiff’s
deadline “to remit additional required information”—though the letter did not provide further
specifics—by an additional 45 days, to March 26, 2016. Id. at 32. Prudential told Elkind that
“[a]ll time frames for the review of Ms. Wiley’s claim will be tolled until the earlier of the receipt
of the additional information or the end of the additional 45 day period allowed for you to supply
such information. At the time we resume our review, an extension of up to 45 days will be taken
to complete our appeal review of Ms. Wiley’s claim.” Id.
Elkind, that same day, objected to Prudential’s 45-day extension. Id. at 33. He wrote:
“The appeal in this case was filed on 12/14/15. Your request is beyond the 45 day deadline
permitted under ERISA for such a request.” Id. On February 26, 2016, Elkind filed this suit on
behalf of Plaintiff. See generally Compl.
III. LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain “sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
A claim is facially plausible when “the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). The factual allegations in the complaint need not be “detailed”;
however, the Federal Rules demand more than “an unadorned, the-defendant-unlawfully-harmed-
me accusation.” Id. (citing Twombly, 550 U.S. at 555). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly,
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550 U.S. at 555). If the facts as alleged fail to establish that a plaintiff has stated a claim upon
which relief can be granted, a court must grant the defendant’s Rule 12(b)(6) motion. See Am.
Chemistry Council, Inc. v. U.S. Dep’t of Health & Human Servs., 922 F. Supp. 2d 56, 61 (D.D.C.
2013).
When evaluating a motion to dismiss under Rule 12(b)(6), the court must accept a
plaintiff’s “factual allegations . . . as true,” Harris v. D.C. Water & Sewer Auth., 791 F.3d 65, 67
(D.C. Cir. 2015), and “construe the complaint ‘in favor of the plaintiff, who must be granted the
benefit of all inferences that can be derived from the facts alleged.’” Hettinga v. United States,
677 F.3d 471, 476 (D.C. Cir. 2012) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C.
Cir. 1979)). The court need not accept as true, however, “a legal conclusion couched as a factual
allegation,” Papasan v. Allain, 478 U.S. 265, 286 (1986), or “inferences . . . unsupported by the
facts set out in the complaint,” Kowal v. MCI Commc’ns Corp., 16 F.3d 1271, 1276 (D.C. Cir.
1994).
A court ordinarily may not consider “matters outside the pleadings” on a Rule 12(b)(6)
motion without converting the motion into one for summary judgment under Rule 56. Fed. R. Civ.
P. 12(d). Matters that are not outside the pleadings include the facts alleged in the complaint,
documents attached as exhibits to the complaint, and documents incorporated by reference in the
complaint. See Hinton v. Corr. Corp. of America, 624 F. Supp. 2d 45, 46 (D.D.C. 2009). Likewise,
documents upon which the plaintiff’s complaint “necessarily relies” are not treated as matters
outside the pleadings—even if submitted by the defendant in support of a motion to dismiss. See
id. In this case, both parties have submitted letters between Plaintiff (or her counsel) and Prudential
concerning the submission and review of Plaintiff’s appeal. Because the court finds that these
letters are either incorporated by reference into the Complaint or necessarily relied upon by the
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Complaint, it considers Defendants’ motion under Rule 12(b)(6), instead of converting it into a
motion for summary judgment. See Fed. R. Civ. P. 12(d).
IV. DISCUSSION
Defendants’ argument is straightforward. They contend that, because Plaintiff filed her
suit before Prudential ruled on her appeal, she failed to exhaust her administrative remedies as
required under the short-term disability plan and thus her action must be dismissed. Defs.’ Mot.
at 11-20; see Commc’ns Workers of Am. v. AT&T Co., 40 F.3d 426, 428 (D.C. Cir. 1994) (“It is
well established that, barring exceptional circumstances, plaintiffs seeking a determination
pursuant to ERISA of rights under their pension plans ‘must . . . exhaust available administrative
remedies under their ERISA-governed plans before they may bring suit in federal court.’”)
(citations omitted). The court disagrees with Defendants that Plaintiff filed her suit too early. It
finds instead that Plaintiff’s appeal must be “deemed exhausted,” and that her action is
appropriately before this court.
A. The Principle of Deemed Exhaustion
The principle of deemed exhaustion is rooted in the Department of Labor’s ERISA
regulations. The relevant regulation reads as follows:
In the case of the failure of a plan to establish or follow claims procedures consistent
with the requirements of this section, a claimant shall be deemed to have exhausted
the administrative remedies available under the plan and shall be entitled to pursue
any available remedies under section 502(a) of the Act on the basis that the plan
has failed to provide a reasonable claims procedure that would yield a decision on
the merits of the claim.
29 C.F.R. § 2560.503-1(l). Although our Court of Appeals has not applied the deemed-exhaustion
regulation, other Circuits have done so. See, e.g., Barboza v. Cal. Ass’n of Prof’l Firefighters, 651
F.3d 1073, 1076-80 (9th Cir. 2011); Eastman Kodak Co. v. STWB, Inc., 452 F.3d 215, 221-23 (2d
Cir. 2006). Additionally, the Supreme Court, citing the deemed-exhaustion regulation, has
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observed that “[plan] administrators are required by the regulations governing the internal review
process to take prompt action, . . . and the penalty for failure to meet those deadlines is immediate
access to judicial review for the participant.” Heimeshoff v. Hartford Life & Acc. Ins. Co., 134 S.
Ct. 604, 614 (2013) (citing section 2560.503-1(l)).
To determine if Plaintiff’s claim should be deemed exhausted, the court must ask whether
Prudential complied with ERISA. See Barboza, 452 F.3d at 1077. More specifically, the question
here turns on whether Prudential complied with the regulation governing the time requirements
for review of a denied disability claim. That regulation provides that “the plan administrator[2]
shall notify a claimant . . . of the plan’s benefit determination on review within a reasonable period
of time, but not later than [45] days after receipt of the claimant’s request for review by the plan.”
29 C.F.R. § 2560.503-1(i)(1)(i), § 2560.503-1(i)(3)(i) (setting an initial 45-day review period for
disability claims). The plan administrator may, however, extend the initial review period under
“special circumstances.” Id. § 2560.503-1(i)(1)(i), § 2560.503-1(i)(3)(i). For disability claims, a
“special circumstances” extension can last no more than an additional 45 days “from the end of
the initial period.” Id. § 2560.503-1(i)(3)(i). The administrator must provide the claimant with
written notice of the extension before the expiration of the initial review period. See id. §
2560.503-1(i)(1)(i).
The ERISA regulation also defines when the clock starts to run on an administrator’s
review of a denied benefits claim:
[T]he period of time within which a benefit determination on review is required to
be made shall begin at the time an appeal is filed in accordance with the reasonable
procedures of the plan, without regard to whether all the information necessary to
make a benefit determination on review accompanies the filing.
2
Although in correspondence with Plaintiff’s counsel Prudential stated that it had not “accepted a delegation as the
Plan Administrator” with respect to the short-term disability plan, Ex. C at 13, it has not here argued that the ERISA
timing regulations do not apply to it. The court therefore assumes that Prudential qualifies as a “plan administrator”
as that term is used in the regulations.
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Id. § 2560.503-1(i)(4). It further provides that
[i]n the event that a period of time is extended as permitted [under the regulations]
due to a claimant’s failure to submit information necessary to decide a claim, the
period for making the benefit determination on review shall be tolled from the date
on which the notification of the extension is sent to the claimant until the date on
which the claimant responds to the request for additional information.
Id.
Thus, these regulations, when read together, grant an administrator an initial review period
of 45 days, beginning from when the appeal is filed in accordance with plan procedures, in which
to review an appeal concerning a disability benefits determination. Prior to the end of that period,
the administrator may extend the review period by another 45 days under special circumstances.
If the special circumstance at issue is the claimant’s “failure to submit information necessary to
decide the claim,” then the clock on the additional 45-day period remains tolled from the date of
the extension until the claimant responds to the request for additional information. Id.
B. Whether Plaintiff’s Claim is Deemed Exhausted
Against this regulatory framework, the court evaluates whether Plaintiff’s claim should
be deemed exhausted. Defendants assert that “Plaintiff’s appeal was [ ] filed as of February 16,
2016”— the date on which Plaintiff supposedly notified Prudential that her appeal was complete
and that she needed no further time to file additional information. Defs.’ Reply, ECF No. 9, at 5
(citing Ex. C at 34). Defendants, therefore, contend that Prudential had 45 days from that date—
until April 1, 2016—as well as an additional 45 days, if needed due to special circumstances, to
complete its review. Id. Because Plaintiff filed her suit before April 1, 2016, Defendants argue
that she failed to exhaust her administrative remedies. Id. Defendants’ argument, however, cannot
be sustained on the law or the facts.
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The court must first determine the date when Plaintiff filed her appeal, at which time the
initial 45-day review period would have commenced. The regulations provide that the 45-day time
period begins when “an appeal is filed in accordance with the reasonable procedures of a plan.”
29 C.F.R. § 2560.503-1(i)(4). Here, Defendants have identified only a limited number of
“reasonable procedures” that a claimant must follow when filing an appeal. The claimant “must”
submit her appeal (1) in writing and (2) within 180 days of the claimant’s receipt of her benefits
determination. Ex. C at 3. Additionally, the appeal “should contain” the claimant’s (3) name,
control number, and Social Security number; (4) the reason that the claimant disagrees with the
determination; and (5) medical evidence or information to support the claimant’s position. Id.
Defendants have not identified any failure by Plaintiff to comply with these procedures.
Thus, assuming Plaintiff’s allegations to be true, and drawing all inferences in her favor, Plaintiff
substantially complied with the plan’s “reasonable procedures” for filing an appeal by December
14, 2015, when her counsel submitted her information—including medical, functional, and
vocational evidence—to Prudential. See Compl. ¶ 18; Ex. 1 at 4. The fact that Plaintiff did not
submit all necessary records by December 14, 2015, is irrelevant. The regulations plainly state
that an appeal is timely filed so long as it is filed in accordance with the reasonable procedures of
the plan, “without regard to whether all the information necessary to make a benefit determination
on review accompanies the filing.” 29 C.F.R. §2560.503-1(i)(4).
Defendants argue that the review period started months later, on February 16, 2016. That
position is based on their reading of a letter sent by Elkind on that date. According to Defendants,
Elkind notified Prudential on February 16, 2016, that Plaintiff’s appeal was “complete and she
needed no additional time.” Reply at 5 (citing Ex. C at 34); see also Defs.’ Mot. at 17. Defendants,
however, mischaracterize Elkind’s letter to Prudential. In his letter, Elkind protested Prudential’s
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actions delaying the start of the review period. He asserted that “there is no extension under ERISA
for extending your time period for the reason claimed.” Ex. C at 34. But Elkind did not state that
his client’s appeal was “complete.” Reply at 5. Thus, the court rejects Defendants’ contention
that, based on her counsel’s representations, Plaintiff’s appeal review period began on February
16, 2016, instead of December 14, 2015.
Having determined that the initial review period commenced on December 14, 2015, the
court turns next to Defendants’ argument that Prudential properly “tolled” the start of the 45-day
review period on multiple occasions to enable Plaintiff to submit additional evidence to support
her appeal. See Defs.’ Mot. at 17; Reply at 4. That argument misreads the regulations, particularly
the concept of tolling. The regulations provide that the initial 45-day review period begins to run
once an appeal is filed in accordance with the reasonable procedures of the plan. 29 C.F.R. §
2560.503-1(i)(4). Once that initial appeal period begins to run, a disability plan administrator can
grant itself, without obtaining the applicant’s consent, a 45-day extension under “special
circumstances.” Id. § 2560.503-1(i)(1)(i), § 2560.503-1(i)(3)(i). If the “special circumstance” is
“due to a claimant’s failure to submit information necessary to decide a claim,” and the
administrator “request[s] additional information,” id. § 2560.503-1(i)(4), then the start of the
“special circumstances” 45-day review period “shall be tolled from the date on which the
notification of the extension is sent to the claimant until the date on which the claimant responds
to the request for additional information,” id.
Here, as the court has found, the initial 45-day time period for Prudential to review
Plaintiff’s appeal commenced on December 14, 2015. That initial review period was set to expire
on January 28, 2016. On or before that date, Prudential had the right to extend the review period
by another 45 days for “special circumstances.” If Prudential had invoked the 45-day “special
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circumstances” extension and provided as its reason that Plaintiff had not submitted the
information necessary to decide her appeal, the additional 45-day review period would have been
tolled from the date on which Prudential sent the notification of extension to Plaintiff. Id. And
the review period would not have started to run again until “the date on which [Plaintiff]
respond[ed] to the request for additional information.” Id.
Prudential, however, expressly disclaims that it ever invoked its right under the regulations
to extend the initial review period by 45 days. See Reply at 5 (“Prudential did not request
extensions for its own review.”), 5 n.1 (arguing that “Prudential could have taken an extension for
itself, if it needed to do so”) (emphasis added). Because Prudential never invoked the 45-day
extension, the regulation’s tolling provision never came into effect.3 Thus, the initial review period
began to run on December 14, 2015, and never was tolled at any point.
Finally, Defendants also seem to argue that Plaintiff should be equitably estopped from
complaining about Prudential’s delayed review because Plaintiff continued to submit records
during the extension periods. Defs.’ Mot. at 17. However, Plaintiffs’ continued submission of
documents after she filed her appeal is perfectly consistent with the regulations. An appeal is
deemed filed “without regard to whether all the information necessary to make a benefit
determination on review accompanies the filing.” 29 C.F.R. § 2560.503-1(i)(4). The regulation
says nothing that would foreclose a claimant from submitting records after the review period has
3
Elsewhere, Defendants do appear to argue that Prudential properly invoked the 45-day extension on February 16,
2016. Defs.’ Mot. at 18 (arguing that Prudential “met” the 45-day extension “requirement when it notified Plaintiff
in writing on February 16, 2016, of the need to take a 45-day extension ‘to allow for review of the information currently
contained in [Plaintiff’s] file’”) (citing Ex. C at 35). But even if the court were to assume that Prudential invoked the
45-day extension on February 16, 2016—the letter Defendants cite is actually dated February 17, 2016—that
invocation came too late. The initial 45-day period expired on January 28, 2016, and Prudential would have needed
to give Plaintiff notice of its decision to invoke the “special circumstances” exception before that date. Moreover,
even if the court were to accept Defendants’ claim that the initial review period, as a result of the 14-day grace period
for mailing delays, started on December 29, 2015, the 45-day review period would have expired on February 12, 2016.
A 45-day extension request four days later on February 16, 2016, would again be too late.
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begun. To the contrary, by not requiring the submission of all records to start the review period,
the regulations contemplate that very practice.
Moreover, Plaintiff’s counsel repeatedly and emphatically protested each unilateral
extension of time, beginning with the very first 14-day extension. See Ex. C at 17 (questioning
the basis for the 14-day extension until December 28, 2015), 24 (demanding plan or claims
guidelines that permit Prudential “to take an extension in considering the filed appeal”), 33 (stating
that the appeal was filed on December 14, 2015, and protesting the 45-day extension as beyond
the “deadline permitted under ERISA”). The fact that Elkind continued to supply additional
information to Prudential during the extensions of time, therefore, does not preclude Plaintiff from
asserting that the court should deem her claim exhausted.
Defendants’ reliance on Hunter v. Metropolitan Life Insurance Co., 251 F. Supp. 2d 107
(D.D.C. 2003), is also misplaced. See Defs.’ Mot. at 19-20. The facts in Hunter posed a very
different scenario. There, the plan administrator acknowledged its receipt of the claimant’s appeal
and began its review period on that date. Hunter, 251 F. Supp. 2d at 109. The plan administrator
then invoked its right to one extension to complete its review, but before it could do so, the claimant
filed suit. Id. Here, by contrast, Prudential asserts that it was permitted to delay the start of the
appeals review process for months after Plaintiff timely filed her appeal “so that [Plaintiff] could
continue to submit documents in support of her appeal.” Reply at 5. Hunter does not allow a plan
administrator to delay the start of the review period simply because a claimant has not submitted
all relevant information with her initial appeal filing or because she submits additional records
after the initial filing.
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V. CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is denied.
______________________
Dated: August 24, 2016 Amit P. Mehta
United States District Judge
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