Brian J. Price v. Xerox Corporation a New York Corporation Shps, Inc., a Florida Corporation, Also Known as Shps Healthcare Services, Inc.

Citations: 445 F.3d 1054; 2006 U.S. App. LEXIS 9728; 2006 WL 1007967Docket: 05-3398

Court: Court of Appeals for the Eighth Circuit; April 19, 2006; Federal Appellate Court

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Brian J. Price appealed after the district court granted summary judgment to his employer, Xerox Corporation, and SHPS, Inc., the administrator of its Long-Term Disability Income Plan. Price argued that the Plan violates the Employee Retirement Income Security Act of 1974 (ERISA) by requiring claimants to pursue a second internal appeal within 60 days of an adverse decision, which he claimed is inconsistent with ERISA regulations mandating at least 180 days for such appeals.

Price began receiving disability benefits on May 7, 2002, but was notified on September 30, 2003, that he was no longer eligible, leading to the termination of his benefits. He filed a first-level internal appeal on July 6, 2004, after receiving a 90-day extension, but did not file a second appeal within the 60 days allowed after SHPS upheld the denial on September 3, 2004.

The district court found that ERISA regulations, while requiring a reasonable opportunity to appeal, do not specify a time frame for second internal appeals and determined that Price failed to exhaust his administrative remedies by not pursuing the second appeal. The Eighth Circuit reviewed the case de novo and affirmed the district court's judgment, concluding that the Plan's requirement for a 60-day second appeal does not violate ERISA, as the regulations do not mandate a specific time frame for such appeals. The court noted that since Price did not follow the Plan's procedures, he could not seek judicial review.

An 'adverse benefit determination' is defined as any denial, reduction, termination, or failure to provide payment for a benefit, including decisions based on eligibility to participate in a plan. The initial denial is agreed to be an 'adverse benefit determination,' which triggers a 180-day period for the first appeal. However, the parties dispute if this definition applies to the outcome of the first appeal. The district court found the regulations ambiguous and lacking case law interpretations, but noted that the language suggests that only the initial denial qualifies as an 'adverse benefit determination,' as plans cannot require more than two appeals for such determinations. The regulations emphasize a 'reasonable opportunity to appeal,' which implies that the term 'determination' refers solely to the initial denial, excluding decisions made during the appeal process.

Price argues that the term 'adverse benefit determination on review' is consistently used for mandatory claims procedures, but the regulations do not specify the timeframe for a second appeal. The inclusion of 'on review' distinguishes the initial denial from subsequent appeals. Consequently, the district court concluded that affirming a denial in a first appeal does not constitute an 'adverse benefit determination,' and thus, an ERISA plan is not required to grant a 180-day period for a second appeal.

While the 180-day requirement does not apply to second appeals, the regulations mandate a 'reasonable opportunity for full and fair review' of adverse decisions. The Plan allows 60 days for filing a second appeal, which is deemed a reasonable period for non-disability ERISA plans, according to regulatory guidance. Price's argument that 60 days is unreasonable overlooks the fact that he had over 180 days to contest the initial denial in the first appeal. The court determined that Price did not exhaust his administrative remedies, leading to the summary judgment in favor of the defendants being upheld. The judgment of the district court is affirmed. Price did not contest the adequacy of notice regarding his appeal rights or the sufficiency of the denial explanation.