may please the court good morning joshua bacharach i represent the defendant appellant reliance here and like to reserve three minutes of time for a bottle or well thank you we're appealing from the district court's entry of judgment in favor of ms waltz in the service a disability case this case presented a number of legal issues for the court and the court ruled against reliance on each of those but we think the st two should that we raise really dispose of the entire case under risks of a claim and generally must appeal in denial of benefits it's referred to as the exhaustion of administrative remedies and it serves a number of them korean include an explicit exhaustion requirement does the plan document include it yes well st my client is not the plane administr there is a claim administrator so there may be a plan document that the employer is responsible for producing that never came out here and that i'm aware of in this case we have the policy that governs and if in a notification letter you must include language a description of the plans review procedures and the time limits so it's actually referring to the letter not  include what's in the plan it doesn't say well there are a few things the other part of that statute the next subsection says every employee benefit plan shell establish and maintain a procedure a procedure doesn't say you must include this in the plan are procedure here is to include it in the letter the plan must establish a procedure but you don't have to include it in the plan i'm not sure i follow the plan it as an entity as an entity rather than plan as a document oh i see what you're saying ok and so the entity has established the procedure that you have to include the procedure in the summary plan document the summary plan document according to s morrow the supreme court decision is not a plan document that kind of fooled all of us or is a practitioner's but the court held that it does not but it does have to include the procedure right it has to include procedures for a claim claim there are a number of exhaustion procedures it might it might but what you have to do what you have to look at is think about it this way your honor if if the appealing which is only in the plan document and there's a denial of a claim is the claimant going to say to themselves you know what let me go out there and ask the employer for a copy the plan document to see what rights i have that's not going to happen but they are going to see that language in that denial letter that's right in front of them that said you may have to well al it says may and on monday we submit a supplemental authority bill versus blue cross baster versus c m york those are from this court they are published decisions and they rejected that very argument they said yes that could be considered permissive language but we hold that you still must exhaust under those circumstances so that argument is gone let me ask you this is there isn't there an exception to the exhaustion requirement if there's no reasonable claims procedure set forth in the plan came in and in this case  exhaustion requirement word of what do you have to say about i disagree for two reasons one is this court has always recognized substantial compliance the goal here is make sure the claimant knows what's going on yeah but what about was there were two levels of appeal the st level of appeal was mentioned in the plan document but the nd level was not and what the court held was the nd level appeal was mention in the denial of the st appeal and they said even though that nd appeal was never mentioned a plan document the claimant had notice of it the claimant could not prove any prejudice because again they had no notice of it therefore the  problem with the exhaustion requirement i disagree your honor this court i know you do with well i have to but this court mark specifically said substantial compliance with the reserve regulations is enough let me ask you this question somewhere  but the policy seems to be affirmatively misleading it says for arbitration claims you must be exhausted see only place that mentions arrests in legal actions it doesn't mention exhaustion only has the sixty day or  hundred and twenty day thing doesn't say anything about a risk doesn't say anything about exhaustion and doesn't say anything about appeals procedures so if i'm looking at this as a lawyer how am i supposed to make heads or tails of that well the arbitration clause is not mandatory it both parties have to agree to it and that never it was never requested here so it's out of the picture if she had requested it and then there may be what i ask i'm sorry your honor i misunderstood th t he's saying you put exhaustion in one place you don't in this instance so when someone a layperson is looking at that documentary even a lawyer they'd think it's almost affirmatively misleading if you're saying you have to exhaust there and the reason it's a permanently misleading is because what the arbitration provisions as i see around that may be valid if there was any evidence that they actually read this and it misled them there's zero evidence of that so there's no prejudice here if they didn't look at that and say you know what i got confused by what you were saying i'm sorry is that in the regs like they actually have to be misled or is it a no that's you have now what's this about whether a reasonable way person reading this thing would understand what they have to do that's what the courts have said you know the for example court and holmes so there's no prejudice alleged here the court and mark said when you have substantial compliance and no prejudice summer plan description in the record was worse does this play on the display and have a summer plan description that was furnished to these people my client's not the plan minister who has that responsibility to produce one to prepare and produce it so i don't hope we would know whether or not or maybe you don't know we wouldn't we wouldn't your honor necessarily not necessarily in some we don't have one in a record in the exactly because this claimant fail to exhaust we would have a lot more information on this is going to turn into the next section your honor that there's no evidence on this transition in coverage because they didn't exhaust and the court made a whole bunch of theories on why she's satisfied the coverage requirements when there's zero evidence because there was no appeal here and if you don't mind i'd like to turn it into that argument can we look at the can we look at that hartford policy because it was attached to the complaint if it's not in the administrative records no harm and whether it's parts whatever part one or part two of that transfer of insurance was satisfied not terry versus simplicity tells us that you must rely on what's in the administrative  record and you're not allowed to go beyond it but the district court did hear and assumed a lot of things including when you look at the transfer of insurance coverage let me ask you this question if so you're saying we're limited to the ministry of record if we were to say we're only we would only get to this point if we said she didn't have to it's all right if we said that you don't have to exhaust are we still bound by the administrative record or at that point is something attached to the complaint which it still bound by the administrative record because the you have to look at what's in the evidence at the time of the final decision the fatah the final decision here being the st decision because there was no appeal so you still have to look at that here i think it's important that we do look at those requirements st i'm not sure how without understanding of the policies we don't have a darker policy we arguably can't figure this out and if that's the case assume i'm right on that then you can't win either you know it's her burden of proof your honor it's her burn of proof that the transfer of insurance coverage was in place the only decision that was correct me if i'm wrong sue she's contesting the underlying decision and what you're saying is she has to show it's erroneous and so if she can't get that into the record then she can show its direct the only underlying decision was that the preexisting condition exclusion applies and there's no doubt that if it does it bars this claim she's arguing now post hoc that something never raised previously that the transfer of insurance coverage language made her transfer of insurance coverage mentioned in the denial letter no because it wasn't i'm sorry did you say you might be able to get coverage under this or were denying it for preexisting condition and you don't satisfy the transfer insurance provision there was no need to do that because it was never raised and not obvious that she did because your honor she last worked october two thousand and twelve our policy comes into effect january two thousand and thirteen she doesn't even start to work until april of two thousand and thirteen there's a several month gap here where she's not at work so why would we think this would apply to her and it doesn't for the reasons that we point our brief may ask you in regard to transfer authority in this policy it would but this court in turn or versus cape coast said that active means actually working so publish a decision by this or but that doesn't capture this situation were you using the term and you're not defining the term in the language of the in the plan documents it in there either in turn or it didn't in turn the court held that by its very meaning active means currently active it good morning your honor and may it please the court my name is j j conway and i represent the police cheryl wallace but we obviously disagree and we assert that the three district court rulings that are the subject of this appeal should all be  the court's orders fully comply with the reso its regulations this court's precedents in the united states supreme court's precedents the supreme court has said repeatedly in the context of a risk of cases that you are in force the plan i agree you interpret him as written but what do you do with this where you're in you're saying in your briefs it seems to me your argument rests on the premise that the exhaustion requirement has to be spelled out in the plan documents and that's just not correct as a matter of law well your honor it respectfully with with in terms of the summary plan description there is a requirement the procedures be set forth and that is ok so if you provided us the summary plan description well this document certificate and proof of insurance and it's also explains what the coverage terms are you're saying there's no summary plan document there's no summary plan description other than this that is in the file and that because this is an insurer because the it's basically an insurance policy because it's basically an interest also so we're deeming it to be in a risk plan but it's an insurance policy it's an insurance there was nothing else other than this policy there was nothing else correct and i think that so it doesn't exist as  given the procedural posture of this case as a ruling on a motion to dismiss it would have been believed that the diff moving party would have brought in evidence that there was a summary plan description that required exhaustion separate in part  well that's that's wrong so i think under our case law if they can say you didn't exhaust and we presume there's an exhaustion requirement if you want to defeat it under eleven o two the statute you can say as you just argued that the summary plan description is rick requires it's required to have the exhaustion requirements listed ok but then you have to provide the document showing it's not listed for us to do that understood right and so it seems to me the burden is on you to provide but the burden is on us in so far is pointing out to what the coverage terms that were provided to participants relative to their disability covers this was the summary of their coverage in this was the certificate of the coverage it was treated is the only document that explains the rights and duties of this participant under this particular plan that is the only document that is in the record and that's the only document  administrative record was produced to us pursuant to reliance maintaining it that's typically how how you perceive the record is it's maintain at the policy administrators of a place of business and then turned over there are t unique points though that i also want to point out is exhaustion is to say that you didn't exhaust is actually a bit misleading reliance told her during communications with her prior counsel that this claim was recurrent under the hartford and so broader who brought it up who is the the the person said you should go to harvard and the attorney agreed or did the attorney bring in the attorney initiated the claim with reliance this claim started  reliance when the claim was denied the attorney requested the claims file the attorney reviewed the claims filed and then sought to enquire about some of the conclusions that were based in the file itself and within there he communicated with them and said i'm inclined to agree that maybe this should be processed with hartford there's a case called crone versus here on memorial hospital which is from the circuit that says when you're communicating with the plan they have to be completely candid with you if you're going down the wrong road they've got to tell you they can't be silent and this is in crone this court imposed a substitute remedy for misinformation in this case were explaining that at least from a procedural standpoint there's an extenuating fact here and so when a lawyer contacts an ass information about the coverage and their silence or they provide information that's incorrect which is that this letter said you may want to appeal and lawyers protective appeals all the time understood and so if if we find it's a mistake of the lawyer then she has an exhausted correct technically that that's correct although i would submit that we do have the alternative arguments that we've we've mention which is then the fact that the court had before it a instances in these administration of reliance contracts where they did not include this language the montoya case is one the schorsch case is another this is a pattern of reliance not putting arista rights in their contract and if you compare it with the hartford contract that's part of sorry there in the in the play in the insurance in the insurance part about this back and forth we had about what is the arbitration provision say what is the we go action provision say have a statement of a reserve rights in that short case and then subsequently it took it out so we've identified three different jurisdictions the th th and th where they're disseminating contracts to a recent plan participants and it doesn't there some indication at least or you had given some indication that you were going to appeal to reliance and you just didn't follow through so in terms of the hartford i would just make a distinction there there is a four page summary in the hartford contract explaining the arista rights in the peel procedures and how this is reviewed there's nothing even that comes close to that and as your honor point out quite correctly if you read those two clauses together they're inherently misleading one says that you have to exhaust to use arbitration the other says that you just have to wait sixty days part of bringing suit in the suit to be timely it's terribly confusing and i disagree strenuously on the argument that claimants don't read their coverage documents and congress didn't believe that congress of these documents are supposed to be written in a way that an ordinary person could understand without the benefit of counsel so i would point out that we have not only the issue about the omission of the statement of course which was count where after the letter came out and it says you can appeal counsel gave some indication that he was going to appeal and that never did it and so i think that's what brings us within krohn because what happened with the confusion here was that information was disseminated that this was a recurrent claim under the hartford policy and if you look at the administrative record in this case the only piece of the contract from the hartford policy is the one that discusses recurrent claim your thing when you're saying information was disseminated you mean in the e mails yes the e mail correspondence and also when he asked for clarification with what was what the plan administrator had found which was that this might be a recurrent claim under her for that set off the appealing for the factual posture of this case is this case began with reliance and as the court held they were mr recht had to go to hartford and start the start of claims process there and again with respect to the exhaustion issue typically you find cases where the claimant is avoiding their obligations they're trying to make up excuses for this case there was active exhaustion based on information they've been provided by a fiduciary they pursued a claim they exhausted it and now it's being used against them in some respects because it was a actually a legal in possibility she could have met the appeal deadlines within the alliance claim if she had to go and start with her for finally i would just point out that we had correspondence with the general counsel's office of reliance and they said no matter what we were arguing was change their position in the case so i do think that there's a futility argument as well moving to the coverage issue there are two very important points to make your with regard to coverage the court just applied the contract terms the court didn't go outside of the contract terms if you look at the transfer of insurance coverage this is the argument that reliance continues to avoid and in misses it talks about two classes of eligible participants those that are actively work in those that would be actively work but for the fact that they are sick or when you're claiming your clients in the latter were in point number two we're in this not in the actively managed here in the lab we're not in the actor let me let me ask one question about that if they agree with you that she was previously whatever she had insurance previously in the premiums were paid so let me move to the rd step the rd step is the total disability have to begin after the effective date which everyone agrees january st right correct yes your money thirty i mean are you allege in your complaint that she left work on october th you're now alleging as i understand it that she actually left work on october th the defendant denied that she left work on october th in their answer and said she left on october th but they're now claiming that she left on october th do i have that right and what is going on your honor that was an oversimplification of the case in the pleading which was was a mistake i told her it was her last day of work she worked a full day on october th and then is the indication from the the lower court record she had she was a nurse she had worked long shifts she had several days off and then her next regular regularly scheduled workday would have been the th there were regularly scheduled workday so does her disability begin on the th the disability began on the t that was when she submitted the claim for but i don't disability as is the mackay case is not a term of art it depends on what the contract terms i understand so in this particular case she was radical when it would make is during the motion to dismiss practice hartford was a party to this case they put in their denial letter they put in their contract and they explain that coverage lasted through january st two thousand and thirteen so the court had that in the backdrop from prior rulings that it had made in this case so then when reliance started making arguments can i ask you a follow up to judge clay's question because it seems to me where you're alleging the th and they're alleging the th and now it's different i get it but th that the finding on that date seems critical to me and the district court never did any fact finding out i think that is correct your honor i think what happened is by the time it got to the merits briefings the issue was th at the briefing stage ok watch them if they so that that is just to clarify i'm sorry so we can look at that stuff that's not in the administrative record were the courts are to look at that and make this determination on the transfer i don't recall which one of the judges mentioned this but yes there was a september twenty five two thousand and fourteen letter from prior counsel and that was one month after the denial of benefits and counsel stated i've been retained by cheryl wallace to handle the appeal of your denial of before we actually formally file our appeal i would request a copy of the entire claim file counsel knew they had to appeal by the way or the heart after they'd been to the heart for no so if you read his brief he says initially when the claim was a knish alee filed reliance told them to go to hartford initially they went through the entire process here with reliance they continued to say you're still on the alliance and they got a decision letter so they can't claim that there was any confusion on their part and counsel here confirmed we intend to now why didn't he five days after this letter sent he gets a copy of the fourteen know that it was at the beginning of the claim handling but she still said i'm pursuing my claim and we still made a decision and we still told her you have to appeal that decision if you think we're liable but i'd like to somebody  reliance tell her or give some indication that hartford was the better road to go we said we believe we never give legal advice ever but you already said here you're supposed to while we're not a fiduciary in respect to your right we can't give misinformation the exact language i don't recall my head it may have said you may want to we believe it is but the claimants always believe what we say we would be in court if they did she obviously disagreed but i really feel i important to address the trance or insurance coverage in the brief amount of time i have left because there is no record to support any of those conclusions reached by the court there are three elements that have to be made you have to be covered under the hartford policy on the transition the she wasn't the court said well she was disabled beforehand therefore she was covered on the transition date but under the harford policy you have to be disabled means unable to perform the one hundred and eighty days and she never met that definition so she wasn't and by the way that harford policy wasn't in the record so it should have been referred to anyways in the ministry it's not in the ministry of record just out of curiosity are you all asserting now based on the pleading yeah well it does and we in the brief actually don't even splits specify it because we never really got firm information on it but your honour's if i may continue briefly thank you your honor the payment of premiums judge you had said that you agree that that was proven but i don't think it ever was there was no evidence that premiums were paid for her because why at the time of the transfer because st of all why would the employer pay premiums for either the hartford palsy in december or the reliance policy in january when this person's never worked since october so they won't be paying premiums for her specifically so there's no evidence of that the administrative record and so what the court did is it or surmised and it's her burden of proof by the way to prove all these elements that this transfer of coverage applied and there was no evidence why because she didn't exhaust at the very least if you feel that she wasn't required to exhaust and i strongly disagree if you feel she was required to exhaust this has to be reminded so that there can be a development