J.W. Counts, Plaintiff-Counter-Defendant v. American General Life and Accident Insurance Company American General Corporation Plan Administrator, Defendants-Counter-Claimants-Appellees, Gulf Life Insurance Company
Docket: 96-8795
Court: Court of Appeals for the Eleventh Circuit; April 29, 1997; Federal Appellate Court
J.W. Counts appealed the Eleventh Circuit's affirmation of the district court's grant of summary judgment in favor of American General Life and Accident Insurance Company (AGLA) regarding Counts' claim for long-term disability (LTD) benefits under the Gulf Life Field Representative's Long-Term Disability Plan, governed by ERISA. The district court found that Counts failed to exhaust his administrative remedies after AGLA suspended his LTD benefits due to a physician's assessment that he was not totally disabled under the Plan's criteria.
Counts, who had worked for AGLA from 1965 to 1990, initially received LTD benefits after becoming totally disabled from a back injury. However, after 12 months, AGLA required confirmation of his total disability status under a revised definition, which considers the ability to perform any occupation. AGLA terminated Counts' benefits and employment after receiving opinions from his physician and two other doctors stating he was capable of light clerical work.
The termination letter informed Counts that he could appeal the decision within 60 days, but he did not do so. Instead, four months after the appeal period expired, Counts' attorney contacted AGLA without formally appealing or requesting specific information. AGLA responded by reiterating its reasons for terminating benefits. The court ultimately upheld that Counts' failure to appeal barred him from challenging the termination of benefits.
Counts' attorney notified AGLA that its termination of Counts' long-term disability (LTD) benefits did not meet the notice requirements of 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(f). AGLA contended that its denial letter was substantially compliant but invited further questions, which Counts did not pursue. Months later, Counts filed a lawsuit claiming wrongful termination of his LTD benefits and that AGLA interfered with his rights under other employee benefit plans. He sought reinstatement of his LTD benefits, continued contributions to other plans, attorney's fees, and civil penalties for AGLA's failure to provide requested information. AGLA counterclaimed for overpayment of LTD benefits. The district court granted AGLA summary judgment, citing Counts' failure to exhaust administrative remedies, as required by the Plan, which mandated an appeal within 60 days of the termination letter. The court determined that the exhaustion requirement could not be excused, as no futility or inadequacy of remedy was present. Although the district court acknowledged a technical deficiency in AGLA's letter, it found that it sufficiently conveyed the reasons for termination. Even if substantial compliance was incorrect, Counts still would not be exempt from the exhaustion requirement, as inadequate termination letters do not negate the need for administrative appeals.
The typical remedy for failing to exhaust administrative remedies in ERISA cases is not to excuse the requirement but to remand the issue to the plan administrator for an out-of-time appeal. Counts previously opposed remand in the district court but now argues it may be appropriate, although appellate courts generally do not consider issues raised for the first time on appeal if the appellant took a contrary position earlier. Counts waived any claim related to deficient notice, so the court need not evaluate whether AGLA's termination letter met notice requirements.
Counts contended that AGLA obstructed his ability to exhaust remedies by not responding to his inquiries. However, unlike the precedent set in Curry v. Contract Fabricators, where the administrator failed to provide necessary documentation, AGLA had sent Counts a written termination letter detailing his decision and appeal rights, and he did not act within the provided timeframe. Additionally, Counts did not formally request plan documents in his communications with AGLA, who had offered further information if requested.
Counts also argued that the exhaustion requirement should not apply to his claims of ERISA violations related to his termination and withholding of information. However, the court maintained that the exhaustion requirement applies to both claims for benefits and statutory violations. Although Counts cited cases from other circuits suggesting otherwise, the court affirmed that it lacks the authority to overrule its own precedent. Ultimately, Counts did not exhaust his administrative remedies, and the district court's decision to not excuse this failure was upheld, leading to the affirmation of the summary judgment in favor of AGLA.
Honorable Maurice B. Cohill, Jr., Senior U.S. District Judge for the Western District of Pennsylvania, presided over a case involving the Employee Retirement Income Security Act of 1974 (ERISA). AGLA took control of Gulf Life operations in 1990. Counts' initial appeal was dismissed due to lack of jurisdiction, but he renewed his appeal after the district court certified its summary judgment order as final. AGLA’s counterclaim remains pending. The court determined that Counts waived any potential entitlement to remedies for inadequate notice, thus not needing to evaluate AGLA's compliance with notice regulations.
Counts contended that the exhaustion requirement should be waived because AGLA allegedly obstructed his attempts to exhaust administrative remedies by not responding to his requests for information. However, the court referenced Curry v. Contract Fabricators Inc., which established that a plan administrator must not deny a claimant meaningful access to review procedures. In this case, AGLA provided Counts with a written termination letter detailing the decision and his right to appeal within 60 days. Counts failed to act within that timeframe and did not request additional plan documents in subsequent correspondence. Therefore, the court concluded that AGLA did not impede Counts’ access to the administrative review process, distinguishing it from the situation in Curry.
Counts also argued that the exhaustion requirement should not apply to his claims that AGLA violated ERISA by terminating him to evade contributions to other benefit plans and by withholding information. However, the court affirmed that the exhaustion requirement is applicable to both actions enforcing statutory ERISA rights and actions for recovering benefits under a plan, citing precedents from Springer v. Wal-Mart Associates' Group Health Plan and Mason v. Continental Group, Inc.
Counts argues for a departure from established precedent, advocating that exhaustion of administrative remedies should not be necessary for statutory violation claims, referencing cases from the 3rd, 9th, and 10th Circuits. However, the court notes that the rationale for requiring exhaustion applies to both claims for benefits and those based on ERISA itself. Despite acknowledging Counts' position, the panel cannot overrule prior decisions of the court, per Bonner v. City of Prichard. Consequently, under existing precedent, Counts was mandated to exhaust his administrative remedies for all ERISA claims. The conclusion reached is that Counts did not fulfill this requirement before initiating his ERISA action, and the district court acted within its discretion by not excusing this failure. Thus, the court affirms the district court's summary judgment in favor of AGLA.
