Alloco v. Metropolitan Life Insurance Co., 2003 WL 1821522 (D. Arizona Mar. 31, 2003)

Plaintiff was employed by American Express Travel Related Services, Inc. (“AMEX”),  and was a participant in Defendant’s long-term disability (LTD) benefits under AMEX’s plan.  Plaintiff applied for LTD benefits due to her development of fibromyalgia.  Defendant denied her claim in writing and notified her of her right to appeal within 60 days of receiving the notice of denial.  Plaintiff never filed an appeal of denial, however she filed a suit in state court alleging claims for breach of contract and bad faith under state law.  The case was removed to federal court.  Defendant moved for partial judgment alleging that Plaintiff’s failure to appeal the denial of LTD benefits (and exhaust her administrative remedies) precludes any claim based on LTD benefits. 

The court held that the subject plan was covered by ERISA.  The court held that the LTD benefit plan cannot be viewed in isolation from the overall benefit plan provided by AMEX, which was clearly an ERISA plan.  Plaintiff argued that plan did not fall under ERISA because she paid her own premiums and participation was voluntary.  However, Plaintiff failed to show that the plan did not meet the third requirement of the safe harbor regulation, that the employer does not endorse the program.  It was clear that AMEX participated in the administration of the LTD benefits to a material extent.  AMEX, designated as plan sponsor and plan administrator, did the following with respect to the LYD plan:  1) designated which employees were eligible to participate; 2)  had the responsibility of filing forms with the Department of Labor required by ERISA; 3) created summary plan description for distribution to AMEX employees. 

Federal court have the authority to enforce the exhaustion of administrative remedies requirement in suits under ERISA.  Plaintiff conceded that she did not exhaust her administrative remedies by pursuing an appeal as advised.  However, she argued that such pursuits would have been futile.  Unfortunately, Plaintiff failed to provide any evidence that the appeal would have been futile.  Mere assertions of futility are not sufficient to overcome the requirement of exhausting administrative remedies.

Defendant’s motion for partial summary judgment as to Plaintiff’s LTD claims granted.