Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-03341/USCOURTS-cand-3_06-cv-03341-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SARAH KOWALSKI,

Plaintiff,

 v.

FARELLA, BRAUN & MARTEL, LLP, et al.,

Defendants.

 /

No. C-06-3341 MMC

ORDER DENYING DEFENDANTS’

MOTION FOR PARTIAL SUMMARY

JUDGMENT RE: EXHAUSTION OF

ADMINISTRATIVE REMEDIES

(Docket No. 15)

Before the Court is defendants’ motion for partial summary judgment on the issue of

exhaustion of administrative remedies. Plaintiff has filed opposition to the motion;

defendants have filed a reply. Having considered the papers filed in support of and in

opposition to the motion, the Court finds the matter appropriate for decision without oral

argument, and rules as follows.

BACKGROUND

On February 15, 2006, plaintiff filed an internal appeal of defendants’ termination of

her ERISA long-term disability benefits; her appeal was stamped “received” by the claims

administrator as of February 17, 2006. (See Stamey Decl. Ex. 2 (Administrative Record

(“AR”)) at 1404.) In a letter to plaintiff’s counsel, dated March 7, 2006, the claims

administrator requested copies of plaintiff’s 2004 and 2005 tax returns, and noted that

federal regulations required defendant to make a decision on plaintiff’s appeal “by April 02,

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2006, unless there are special circumstances.” (See AR at 1681.) The letter further stated:

“If we do not receive the requested information in time to make our decision by April 02,

2006, federal regulations allow us to extend the time for completing our review by an

additional 45 days.” (See id.) The claims administrator’s notes of a telephone call he made

to plaintiff’s counsel on March 7, 2006 state they discussed whether there would be an

additional independent medical examination (“IME”), and that the claims administrator told

counsel that he did not know, but that if “it was recommended by the medical review,’ there

would be another IME. (See id. at 1683.)

In a letter to plaintiff’s counsel, dated March 31, 2006, the claims administrator

apprised counsel that defendants needed an extension of “up to 45 days to make a

decision on [plaintiff’s] claim appeal,” because defendants had not yet received from

plaintiff the “financial information previously requested.” (See id. at 1715.) The claims

administrator further stated that defendants were “proceeding with [their] medical review,”

and informed plaintiff that plaintiff had the right to request an IME “should opinions differ on

the degree of medical impairment.” (See id.) On the same date, plaintiff’s counsel faxed

copies of plaintiff’s tax returns to the claims administrator. (See id. at 1720.)

At some point, the claims administrator retained a neurologist, Alan Neuren, M.D.,

(“Dr. Neuren”), who reviewed the medical record and contacted plaintiff’s physicians for

clarification of their reports. (See, e.g., id. at 1748.) In a written report dated April 20,

2006, Dr. Neuren stated his disagreement with the conclusions of plaintiff’s physicians that

plaintiff was disabled, and opined that plaintiff should have been referred for

electrodiagnostic testing to determine whether plaintiff was suffering from nerve damage. 

(See id. at 1764-78.)

In a letter to plaintiff’s counsel, dated May 17, 2006, the day before the abovereferenced 45-day extension expired and nearly a month after the date of Dr. Neuren’s

report, the claims administrator stated: “As a result of our medical evaluation, we have

determined that it is necessary for your client to be examined by an independent physician

of our choice.” (See id. at 1815.) The claims administrator further stated therein: “The

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 Although defendants state in their motion that “a further request was made, but

[plaintiff’s counsel] refused to allow the IME to go forward,” defendants have submitted no

evidence that they attempted to reschedule the IME at any time after June 22, 2006.

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extension time period will stop while we wait for the results of this examination and will

begin again after we receive the examination report.” (See id.) 

In a letter from plaintiff’s counsel to the claims administrator, dated May 19, 2006,

counsel objected that the policy did not provide for an additional IME, that it was

unreasonable to subject plaintiff to another IME, and that defendants’ request to do so was

untimely under the applicable federal regulations. (See id. at 1821-22.) In a letter dated

June 7, 2006, the claims administrator responded that twenty months had passed since the

previous IME, that plaintiff had submitted new medical evidence in connection with her

appeal, and that an additional IME was “reasonably required.” (See id. at 1834-35.) 

Thereafter, in a letter dated June 8, 2006, the claims administrator notified plaintiff’s

counsel that an IME had been scheduled for June 22, 2006. (See id. at 1870.)

Meanwhile, on May 22, 2006, plaintiff filed the instant action. On June 15, 2006, the

claims administrator received notice of the lawsuit, (see id. at 1878), and canceled the IME,

(see id. at 1887). Apparently, plaintiff was not notified of the cancellation; in a letter from

plaintiff’s counsel to the claims administrator, dated June 20, 2006, plaintiff’s counsel stated

that plaintiff would “attend the IME as scheduled, but under protest.” (See id. at 1905.) 

Counsel further stated: “There is no legal authority for your demanded post-appeal IME,

nor for your contention the appeal period is tolled, and we will not agree to it.” (See id. at

1906.) Thereafter, in a letter dated June 22, 2006, counsel stated that plaintiff had

appeared for her IME appointment, as scheduled, but was told that the IME had been

cancelled the previous week; counsel complained that neither plaintiff nor her counsel had

been advised of the cancellation. (See id. at 1901.)1

The record does not indicate defendants have ever issued a decision on plaintiff’s

appeal.

Defendants now move for summary judgment on the sole ground that plaintiff failed

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to exhaust her administrative remedies before filing suit.

LEGAL STANDARD

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment as

to “all or any part” of a claim “shall be rendered forthwith if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” See Fed. R. Civ. P. 56(b), (c). Material facts are those that

may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986). A dispute as to a material fact is “genuine” if the evidence is such that “a

reasonable jury could return a verdict for the nonmoving party.” See id. The Court may not

weigh the evidence. See id. at 255. Rather, the nonmoving party’s evidence must be

believed and “all justifiable inferences must be drawn in [the nonmovant’s] favor.” See

United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989)

(en banc) (citing Liberty Lobby, 477 U.S. at 255).

The moving party bears the initial responsibility of informing the district court of the

basis for its motion and identifying those portions of the pleadings, depositions,

interrogatory answers, admissions and affidavits, if any, that it contends demonstrate the

absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986). Where the nonmoving party will bear the burden of proof at trial, the moving

party’s burden is discharged when it shows the court there is an absence of evidence to

support the nonmoving party’s case. See id. at 325. Where the moving party “bears the

burden of proof at trial, he must come forward with evidence which would entitle him to a

directed verdict if the evidence went uncontroverted at trial.” See Houghton v. South, 965

F.2d 1532, 1536 (9th Cir. 1992) (citations omitted); see also Fontenot v. Upjohn, 780 F.2d

1190, 1194 (5th Cir. 1986) (holding when plaintiff moves for summary judgment on an issue

upon which he bears the burden of proof, “he must establish beyond peradventure all of the

essential elements of the claim . . . to warrant judgment in his favor.”) (emphasis in

original).

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A party opposing a properly supported motion for summary judgment “may not rest

upon the mere allegations or denials of [that] party’s pleading, but . . . must set forth

specific facts showing that there is a genuine issue for trial.” See Fed. R. Civ. P. 56(e); see

also Liberty Lobby, 477 U.S. at 250. The opposing party need not show the issue will be

resolved conclusively in its favor. See Liberty Lobby, 477 U.S. at 248-49. All that is

necessary is submission of sufficient evidence to create a material factual dispute, thereby

requiring a jury or judge to resolve the parties’ differing versions at trial. See id.

DISCUSSION

Before bringing an ERISA claim for disability benefits, a claimant must exhaust his

administrative remedies. See Sarraf v. Standard Ins. Co., 102 F.3d 991, 993 (9th Cir.

1996); see also Amato v. Bernard, 618 F.2d 559, 567-68 (9th Cir. 1980) (explaining policy

reasons for exhaustion requirement). 

Here, defendants argue, plaintiff failed to exhaust her administrative remedies, in

that she filed the instant lawsuit before defendants issued a decision on her appeal. 

Plaintiff responds, inter alia, that the time for defendants to issue such decision had

elapsed before she filed suit, and that, consequently, plaintiff had exhausted her

administrative remedies and was entitled to file the instant action.

Where a disability benefits claimant seeks review of an adverse benefit

determination, the applicable federal regulations require the plan administrator to notify the

claimant of the plan’s decision “within a reasonable period of time, but not later than [45

days] after receipt of the claimant’s request for review by the plan, unless the plan

administrator determines that special circumstances . . . require an extension of time for

processing the claim.” See 29 C.F.R. §§ 2560.503-1(i)(1)(i) and (i)(3)(i). “If the plan

administrator determines that an extension of time for processing is required, written notice

of the extension shall be furnished to the claimant prior to the termination of the initial [45-

day] period,” and such notice “shall indicate the special circumstances requiring an

extension of time and the date by which the plan expects to render the determination on

review.” See 29 C.F.R. § 2560.503-1(i)(1)(i). “In no event shall such extension exceed a

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period of [45 days] from the end of the initial period.” See 29 C.F.R. §§ 2560.503-1(i)(1)(i)

and (i)(3)(i). 

Here, the evidence is undisputed that defendants received plaintiff’s appeal on

February 17, 2006, and notified plaintiff of the need for a 45-day extension on March 31,

2006, before termination of the initial 45-day period. Consequently, the extended 90-day

period (the 45-day initial period plus the 45-day extension) expired on May 18, 2006, four

days before plaintiff filed suit. 

Contrary to the statement of the claims administrator in his May 17, 2006 letter, the

asserted need for an IME provides no basis for tolling the 45-day extension period. 

Although § 2560.503-1 provides for tolling of the extension period under certain

circumstances, such circumstances are not present here. In particular, § 2560.503-1

provides that where the extension period is needed because of “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.” See 29 C.F.R. § 2560.503-1(i)(4). Here, however, the

March 31, 2006 letter notifying plaintiff of the need for an extension stated the extension

was needed only because plaintiff had not submitted her tax forms, not because

defendants wished to conduct an IME, (see AR at 1715), and plaintiff faxed her tax forms to

the claims administrator that same date. Accordingly, there is no basis for tolling the

extension period pursuant to § 2560.503-1(i)(4). With the sole exception of the tolling

provided in § 2560.503-1(i)(4), the regulations, as noted, preclude an extension in excess

of 45 days. See 29 C.F.R. §§ 2560.503-1(i)(1)(i) and (i)(3)(i).

The regulations further provide that where a plan fails to “follow claims procedures

consistent with [§ 2650.503-1], a claimant shall be deemed to have exhausted the

administrative remedies available under the plan[.]” See 29 C.F.R. § 2560.503-1(l). 

Accordingly, because defendants failed to issue a decision within 90 days of receipt of

plaintiff’s appeal, plaintiff is deemed to have exhausted her administrative remedies. See

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 Although both plaintiff and defendants devote considerable time to a discussion of

the propriety of defendants’ request for an IME, the Court need not resolve such dispute for

purposes of the instant motion. Even assuming defendants were entitled to require an IME

of plaintiff for purposes of determining the merits of plaintiff’s appeal, defendants failed to

seek an IME in a timely manner. As discussed, defendants were not entitled to tolling

based on the request for an IME, and thus had a maximum period of 45 additional days

(based on the extension they secured for purposes of reviewing financial information) in

which to seek, obtain, and evaluate an IME.

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id.; see also, e.g., White v. Sun Life Assurance Co. of Canada, 2007 WL 1218209 at *18

(4th Cir. Apr. 26, 2007) (citing § 2560.503-1(l) (“If the plan fails to make a decision with

these deadlines, administrative remedies will be considered to be exhausted, and a

claimant is entitled to file suit.”); Linder v. BYK-Chemie USA Inc., 313 F. Supp. 2d 88 (D.

Conn. 2004) (holding plaintiff exhausted administrative remedies where plan did not

address benefits claim within regulatory deadline); Fleming v. Kemper National Services,

Inc., 2004 U.S. Dist. LEXIS 28378 at *11-14 (N.D. Cal. March 2, 2004) (holding plaintiff had

adequately alleged exhaustion of administrative remedies where plaintiff alleged plan failed

to address appeal within regulatory deadline); Sidou v. Unumprovident Corp., 245 F. Supp.

2d 207, 216 (D. Maine 2003) (emphasis in original) (“[I]t is simply unreasonable to request

that a claimant submit to medical examinations after the applicable deadline for ruling on

her appeal”) (emphasis in original); cf. Gatti v. Reliance Standard Life Ins. Co., 415 F.3d

978 (9th Cir. 2005) (holding prior version of § 2560.503-1, which provided claim was

“deemed denied” if decision was not made within regulatory time limits, gave “claimants the

ability to access the courts” if plan failed to issue decision within time limits set forth in

regulation).2

CONCLUSION

Accordingly, for the reasons set forth above, defendants’ motion for summary

judgment on the issue of exhaustion of administrative remedies is hereby DENIED.

This order terminates Docket No. 15.

IT IS SO ORDERED.

Dated: May 7, 2007 

MAXINE M. CHESNEY

United States District Judge

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